Lockdown necessary, but the country's economy will never be the same again
It's near impossible to forecast with any certainty what awaits South Africans beyond the national lockdown. The only certainty at this stage is that things will not be as they were before.
Many of our social and economic constructs are being altered - hopefully for the better - as the whole world battles together to contain the spread of the coronavirus.
The Covid-19 crisis has forced many "nonessential" businesses to close temporarily to help reduce the infection rate and limit the effects of the virus on our already ailing healthcare system.
There is no doubt the lockdown will have a major negative impact on our economy, which is already embattled and wrestling with the triple threat of unemployment, inequality and poverty.
While investors have been expecting it for some time, Moody's recent downgrade of SA to junk status has added more salt to the wound. It cited SA's inconsistent power supply, poor economic growth as some of the reasons.
The full impact of the pandemic is yet to be felt but early indications are that it will affect, in particular for the poor. While the downgrade could put pressure on the rand, the weak economy and low oil prices mean that higher petrol or other prices are unlikely. Sharp declines in interest rates over the past few months will also help indebted consumers.
SA has for some time seen very weak growth. According to Old Mutual, the economy is likely to record -5.7% real GDP growth in 2020, tipping the budget deficit to -12%. Prolonged contraction will lessen employment opportunities in an already depressed labour market.
SA is among the most unequal societies in the world. Income distribution remains skewed; a large section of the population earns below R1,277 per month while only a small percentage falls within the R48,000 per month income bracket. If the disease were to spread mostly across low-income areas, it would disrupt the earning potential of many breadwinners and essentially destabilise society.
There's another aspect to the coronavirus which threatens the very fabric of our society: the loss of breadwinners due to severe illness, prolonged absence from work or death.
Unlike developed countries where breadwinners tend to provide for their nuclear family, in SA extended family members depend on a small number of breadwinners.
Experts have pointed out that people over 65 are at higher risk of severe illness once infected by the virus. This is the demographic that gets state grants and fulfils the role of breadwinner in many families.
If younger people understood this, they would realise it's not just their own lives they are putting at risk when they break lockdown rules.
Citizens carry an enormous responsibility in ensuring the virus does not spread further. It is in everyone's best interest for all sectors of society to work in a united way. Corporates cannot achieve their aims if employees are sick, nor if there are no customers with the means to buy their products or services.
I commend all the organisations that have taken steps in this direction. Financial services providers have put various concessions in place such as "payment holidays". While there are terms and conditions attached, it does offer some relief in the short to medium-term - and equips consumers to restructure their personal finances for the challenging times ahead.
Our most effective weapons against this virus remain relatively simple: washing our hands and keeping a physical distance from others. The time is now for all of us to set aside our differences. Let's pull together like never before to save lives and reclaim the future.
-Manyike is head of financial education at Old Mutual
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