If the economy is to have a recovery of some sort, the Level 3 lockdown restrictions have to go.
I was glad to see sense prevail as far as the sale of alcohol is concerned. When President Cyril Ramaphosa addressed South Africans in his February 1 #familymeeting, it was clear that some tough political decisions had been made.
Still, no amount of easing restrictions can hide or cover the fact that the government has been incompetent in procuring vaccines for Covid-19.
Anybody who believes the arrival of the first consignment of vaccines is reason to celebrate is deluding themselves.
Failure to deliver
Ours is a government that has demonstrated that it can cock up even the simplest of tasks – the delivery of textbooks to schools.
A vaccination rollout requires a detailed plan if it is to reach the intended populace. Before that can happen, there has to be an established management system in place.
Lessons from the European Union’s (EU’s) supposedly centralised approach to vaccine procurement for member states demonstrates how even advanced economies are not impervious to bungle ups, with incompetence leading to a shortage of supplies at vaccines centres in various countries. Moreover, EU member states that were hit hard by Covid-19 looked to the European Commission to procure the vaccine collectively; unfortunately that approach backfired and resulted in a three-month delay in placing orders.
In contrast, the United Kingdom had a three-month head start in the race to secure the vaccines.
The failure of the EU saw what began as collective action and solidarity in the face of the global pandemic become an embarrassment for member states who have to explain to their citizenry why there is such a long wait for the vaccines and who is responsible for the disaster.
Mistakes are an inescapable part of life, and some come with a greater economic cost than others.
Capacity and means
While an ailing EU might take a while to get its faltering vaccine rollout programme going, as a bloc it has enough capacity and the means to:
- Get more people vaccinated despite the late start; and
- Ensure the false start does not have far-reaching economic consequences for member states, by offering financial support; while
- Individual countries can copy the UK approach of procuring the vaccines on their own instead of using a centralised system.
The same cannot be said for South Africa.
First, the country had to scramble to raise funds for the down payment of the vaccine and could barely afford it. Second, the paid-for AstraZeneca vaccine has been shown to be less effective in treating the country’s variant of Covid-19, bringing the vaccination programme to a standstill. Third, the direct cost – including the money spent on a vaccine that is ineffective and the delays in the vaccination programme – is significant.
Together with the improbability of the government easing restrictions, lives and livelihoods are at risk and the prospects of economic recovery are dim.
In roughly five months, the country went from a government that seemed to have a handle on the pandemic in the best possible ways, to facing a possible third wave of the pandemic in the coming winter months.
Impact is evident
In a country characterised by historic inequality, the costs of the government’s Covid-related incompetence (vaccine bungle up, PPE procurement corruption, imposed restrictions and lack of clarity/transparency about the R500 billion relief/stimulus package) is seen in its economic impact on life and capital.
Business will not recover lost production and workers will not recover lost earnings, since the demand for labour has been reduced.
Furthermore, by any meaningful measure, the terrible trio of poverty, joblessness and inequality is likely to increase further.
Unfortunately, 2020 caused sudden changes to where resources and public spending are focused.
Covid-19 has been the unplanned-for yet extremely expensive unforeseen cost that required resources to be shifted away from their intended purpose to combating the pandemic.
The pandemic caused disruptions to finances at state, business and individual level. In some cases the distress caused by these sudden changes, to which each actor responded differently, has been significantly more visible than others. Some companies, for example, have closed for good and people have lost their jobs.
The main thrust of this point is that, contrary to popular rhetoric (focusing only on the fact that lives are at risk from Covid-19), when the main channels of economic activity are suddenly interrupted – whether by the pandemic or ensuing restrictions – the outcome is detrimental to most people. Both the World Bank and IMF have shown that economic growth is a key driver in reducing poverty, and as 2021 shows little to no signs of economic recovery for South Africa, the long-term impact of interrupted economic activity will surely be a rise in poverty and unemployment.
However, in government, the disruptions caused by the pandemic have revealed a frightening reality – South Africa has leaders who cannot lead it out of crisis, because they have neither a plan nor the know-how to react once a crisis has hit.
The pandemic is a pernicious cause of economic disruption and distress on its own; it does not need government ineptitude to add impetus to its destructive force.
It takes more economic literacy and long-termism than the government possesses to realise that the costs of ineffectively handling the pandemic will lead to the third wave.