ISSN 2330-717X

South Africa: The Horrendous Impact Of COVID-19 On Economy – Analysis

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By Devendra Kamarajan

The COVID-19 pandemic will push South Africa’s overall GDP down by 7.9% in 2020 leading to major setbacks in addressing poverty, unemployment and inequality, the government’s development priorities, according to new research by the United Nations Development Programme (UNDP). The study expects the economy to recover slowly through 2024.

It points out that female-headed households, persons with lower levels of education and the Informal Sector are hit hardest. Those with access to technology and digitisation are faring better. Innovative government policies and action are therefore needed for recovery, emphasizes the report. COVID-19 negatively impacts the attainment of the Sustainable Development Goals (SDGs).

Chaired by UNDP Resident Representative Dr Ayodele Odusola, the study was launched on August 19, with representatives from government, civil society, private sector and academia joining the event.

In her opening remarks, UN Resident Coordinator, Ms Nardos Bekele-Tomas defined the pandemic as not only a health crisis, but also an economic, security, humanitarian and human rights crisis. With this, she urged the audience to help the United Nations to “think and help unpack how we move forward to build back better to empower women, the elderly and those who have been severely impacted by this pandemic”, she said. “Never waste a crisis, it is an opportunity for change,” she stressed.

The report focuses on how COVID-19 will drive temporary and long-term changes in poverty levels in South Africa and the classification of households that are at risk. The story of Ms Khumbulile Thabethe, a single parent with three children who gave a personal testimony, was a stark reminder of the reality of how a virus, lock down and being a single parent head of a household has impacted our lives.

As she launched the report, South African Minister of Cooperative Governance and Traditional Affairs, Dr Dlamini-Zuma, highlighted that the effects of this virus are bound to be with us with us for some years and that our lives have been altered and altered forever.

The reality of apartheid South Africa, inequality, poverty, spatial planning has further exposed vulnerability; the virus has confirmed that South Africa continues on a path of two economies with “the most vulnerable being a poor township African woman sometimes with a baby on her back, further exacerbated by gender based violence”, she said.

She called for a skills revolution complemented by the adoption of a technology strategy and the delivery of a district developing model by promoting gender responsive budgeting. With this, she urged that the study should find its way into every district and municipality.

Minister of Health, Dr Zweli Mkhize reminded the audience that there is no blue print to respond to this pandemic, making it difficult to manage; and recognised that COVID-19 has exposed the weakness of development; for this reason there was a need “to mount a whole of society approach”, he said. He also stressed that rebuilding livelihoods will rebuild the economy.

In her presentation, UNDP Senior Economist, Ms Fatou Leigh indicated that:

  • Lower Bound Poverty levels are also set to increase by 46% in 2020 under the optimistic scenario and as much as 66% in the pessimistic scenario; with 34% of middle-class households likely to fall into the vulnerable class, and about 44% chance for persons with permanent employment type changing to contract type are likely to fall back into poverty.
  • Populations hit especially hard are already-impoverished female-headed households, persons with only primary education, persons without social assistance, black populations, and heads of households who have been pushed from permanent to informal employment.
  • About 54% of such households entering informal employment are likely to fall into poverty, as well.  Income inequality is likely to increase due to the skewed negative impacts on already-disadvantaged populations.

The study further observes that economic sectors most disadvantaged by the COVID-19 outbreak include textiles, education services, catering and accommodations (including tourism), beverages, tobacco, glass products, and footwear. Small and medium enterprises are most negatively impacted.

A panel discussion by representatives from Human Sciences Research Council (HSRC), United Nations Population Fund (UNFPA), and the National Planning Commission pointed out some of the limitations of the study and noted that no single, silver bullet policy action exists to solve the crisis.

Instead, combined policy actions – focusing on populations hit hardest by the outbreak and its consequences – were needed, with social protection mechanisms, re-skilling programmes, liquidity measures, tax deferrals, and job support among options for consideration.

IDN

IDN

IDN-InDepthNews offers news analyses and viewpoints on topics that impact the world and its peoples. IDN-InDepthNews serves as flagship of the International Press Syndicate Group, partner of the Global Cooperation Council.

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