Recent transactional data shows how consumer spending took a hard knock from the Covid-19 third wave and stricter lockdown, as well as the unrest from the rioting and looting that occurred during the month. These two events have dented the country’s economic recovery in a short time.
BankservAfrica’s Card and Point-of-Sale (POS) transactional data measured consumer spending from the lockdown levels during the June to July period, as well as [during] the riots in KwaZulu-Natal and Gauteng in July. It also compares the spend over this period against the 2020 and 2019 figures.
“The massive dips observed in our consumer spending data in July 2021 are worrying, especially when compared against the previous months where the economy was making good headway against the 2020 slowdown,” says Shergeran Naidoo, head of stakeholder engagements: BankservAfrica.
Transactions during the week of looting
During the main week of looting from July 11, the volume of card and ATM cash withdrawals declined from about 4.5 million transactions per day to about 4.3 million (see Graph 1). This was, however, slightly alleviated by the panic buying in the two affected provinces.
Due to the Sassa grant payment dates (which are factored in the transactional data) and the looting, which started in earnest on July 9, the average number of transactions equalled 3.35 million for the 15 days to July 24 compared to the 3.69 million transactions for the same 15 days to June 24.
The impact was therefore a 9% drop on the comparable 15 days in July 2021. This indicates that the riots and looting had at least a two-week impact on consumer spending on POS and ATM transactions.
Transactions during the May/June lockdown levels
From May 31, when Level 2 lockdown was introduced due to the sharp rise in Covid-19 infections, the number of transactions dropped.
Transactions declined further when Level 3 was declared on June 15 and even further when Level 4 was announced on June 27.
It appears South Africans were taking a cautionary approach during the third wave. Spend was also affected by restrictions, such as the prohibition of alcohol sales, and for restaurants that were unable to operate.
The purple line in Graph 1 indicates the date that former South African president Jacob Zuma was imprisoned. In the days following, when disruptions began and led to the looting, spending remained about 5% below the same period two years ago. There is a slow recovery now.
Graph 1: Moving one-month actual volume of card and ATM transactions
The consumer spending impact from the Level 4 lockdown and the riots is quite substantial, and one can expect this to show a negative impact on June and particularly July economic data.
The estimated 9% transaction decline over 15 days could be equal to about a 5% decline for July for consumption expenditure.
The change in card and cash spending since 2020
Interestingly, the 2020 data also shows a decline in the value of transactions from a very strong year-on-year growth in April and May (due to the very low base because of lockdown levels 5 and 4 during the same 2020 period).
Since adjusted Level 4 was announced on June 27 (the brown area in Graph 2), transactions declined. South Africans have spent 3.1% less in real terms. Spending dipped again on July 8.
Graph 2: Percentage change of real value of card and ATM cash transactions on 2020
The change in consumer spending on card and cash since 2019
Due to South Africa being in the fourth month of the Covid-19 pandemic in July 2020, and under strict lockdown, the 2019 pre-pandemic figures have been used as a base to illustrate the impact on normal year transactions.
On this basis, South African consumers have spent around 5.2% less since the adjusted alert levels 3 and 4 came into force in June 2021 when compared to 2019. The most recent change was -2.6%.
In the days following Zuma’s imprisonment (see the purple line in Graph 3), when disruptions began and led to looting and rioting, spending remained about 5% below the same period two years ago. There is a slow recovery now.
Graph 3: Percentage change for card and ATM cash transactions on 2019