Economic Changes After Coronavirus In South Africa

The COVID-19 pandemic is still wreaking havoc across the world. Almost every country has been affected, and the disease is unlikely to disappear. For governments, response to the outbreak presents a dilemma between economic development and the health of the nation. South Africa is no exception.

As of this writing, the country has 22,923 active cases and 998 official deaths. The number of daily new cases is only growing. The effects of the crisis on the social and economic structure are easy to see. Here is how the government has handled the pandemic so far.

Why Relief Packages Aren’t Enough

The government did not hesitate to impose lockdown after the pandemic started spreading across the country. It released a comprehensive support package of $26 billion. This equaled 10% of the national GDP. By mid-2021, the set of welfare and business support measures is expected to grow to approximately $46 billion.

However, this influx of funding is hardly sufficient to cope with the humanitarian costs incurred. The lockdown, which has confined the population to their homes, sent malnutrition rates up. It has affected the well-being of consumers immensely.

Dramatic Unemployment Projections

Before the outbreak hit, the country already had extreme unemployment – the rate was close to 30%. Following the pandemic, the situation is unlikely to improve soon. Today, close to 6 million people are eligible for a special unemployment benefit. It is, however, meager – just $19 per month.

Workers in the gig economy have been hit most severely. Residents are likely to turn to alternative sources of income – such as Internet-assisted trading. Through international brokerage firms like FXTM, they may earn from online Forex trading and develop investment portfolios with affordable initial deposits. Such schemes for working from home remain a viable opportunity, even in the face of the global crisis.

Water Supply: Potential Overhaul

The pandemic is expected to spur the renovation of the country’s water supply systems. Currently, 13% of the population are estimated to have no safe access to drinking water. However, some researchers question this figure provided by Stats SA. Many communities, especially informal settlements, and the homeless cannot access drinking water or sanitation facilities.

It is now clear that containment of the pandemic and any infection later depends on the efficiency of sanitary infrastructure. Without conditions for proper hygiene, any measures will be futile. Thus, the government is expected to enact bills in the field of water supply and quality management, especially for the poor.

Public Health: in Need of a Boost

The existing system is clearly inadequate to meet the current needs. In the months preceding the crisis, the National Health Insurance Bill received a barrage of criticism. Now, the resistance is waning. Under the bill, single-payer contributions will finance universal health coverage. South Africa needs a well-funded health system urgently. It is imperative for the fight with the pandemic.

Economic Reform

According to President Ramaphosa, the coronavirus outbreak has been a turning point for the country. It marks its transition to a more viable economic model – away from the lingering legacy of apartheid. He termed it a “post-war situation”.

The economic impact of the virus and the lockdown measures has been uneven. This has highlighted the need for a radical change in the entire system. The most affected consumers belong to low-income categories employed by the following industries:

  • service;
  • tourism;
  • mining;
  • transport, and
  • manufacturing.

South African Airways (SAA) is one example of mismanaged assets owned by the government. Such weak and allegedly corrupt entities need an overhaul. Eskom, a state-owned energy provider, is in a similar situation. The Ministry of Public Enterprises has been given the green light to start disposing of such toxic assets.

Currently, the bone of contention is the source of funding for the recovery plan. The International Monetary Fund and the World Bank are two conservative institutions, but their public perception is hardly favorable. They are associated with neither affordable social services nor the growth of the public sector.

A potential downside of the bailout is corruption. To counteract and prevent any misuse of power, a special regulatory body has been established. The Special Investigating Unit reports to the President and the parliament, and its purpose is the elimination of corruption. Meanwhile, civil society is looking out for constitutional violations and lockdown challenges.

Conclusion: After the Pandemic

The rising infection rates point to the inefficiency of the local healthcare system. The government must take drastic measures to overhaul the national economy once the virus is contained. So far, statistics have shown the rapid spread of the disease. Employment problems prompt locals to explore alternative sources of income, such as Forex trading. The state relief packages may not suffice to help the country recover. Overall, the economic effects of the crisis are sure to be lasting.

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