In order to maintain contact with donors and the donor community, the UKZN Foundation embarked on a series of webinars in 2020. The Foundation’s recent webinar on South Africa’s economic future beyond COVID-19 was addressed by Chief Economist and Head of Research for the Standard Bank Group, Mr Goolam Ballim.
Ballim’s interests span politics, the macro-economy and financial markets. He and his team consistently earn accolades for their research. His presentation, that was titled: Can South Africa Survive COVID-19 Beyond 2021? examined the pandemic’s impact on the global and African economies, and their expected recovery.
He noted that, South Africa achieved significant economic growth of 5% from 2002 to 2007, generating about two million new jobs. Calling this the “golden age”, Ballim added that the 2008/2009 global economic crisis did not leave the country unscathed.
Examining the impact of South Africa’s recent move to level 1 lockdown, with the economy slowly opening up, while anticipating a third wave, Ballim said what weighs on economic growth is not the pandemic’s direct impact on people’s health, but the economic impact of lockdowns and weak export markets.
‘We would argue that two-thirds of economic loss was a function of the choice of public lockdown, while a third was due to weaknesses in core markets that Africa trades with, especially in the developed world.’
He said that going into 2021, we are likely to experience the same levels of lockdown that were witnessed in the second and third quarters of 2020 in various African nations.
However, Ballim added that there will be a more sensitive approach to the economy. ‘In South Africa we have not revisited level 5 as was the case last year but instead we have had lower levels of stringency between levels 1 and 3.’
Turning to job losses and people receiving lower incomes, he said that at least 600 000 to 700 000 jobs were shed in South Africa in 2020 that have not been restored. However, ‘for the most part, income levels have returned to pre-pandemic levels.’
Noting that age has been the most significant indicator of severe disease and fatalities, especially among those over the age of 65, Ballim said that most African countries have a large youthful population which serves as a shield against a harsher COVID-19 impact. While about a quarter of the population in more developed countries is over the age of 60, with those under 20 accounting for about 22%, sub-Saharan Africa has a median age of 19.7 compared to Europe at 42.
Ballim noted that electricity shortfalls have also had a significant impact on South Africa’s economic growth, with the most affected industries including manufacturing, mining, agriculture and utilities. While a lack of trust, crime, corruption and political instability have impacted economic growth, progress has been made in reforming institutions like the South African Police Service, investigative bodies, the Hawks, and the National Prosecuting Authority, etc. These are far from comprehensive, but have repaired the country’s institutional framework to some degree.
Ballim said that the rand will continue to benefit from the weaker dollar, but we must be mindful that volatility will recur. He concluded by stating that 2020 to 2030 will contrast markedly with the previous decade and there will be significant opportunities for wealth creation during the recovery. ‘In the next ten years we are likely to see the stock market expand far more than the 50% recorded during the previous era. Entrepreneurship, opportunities in Africa and the cementing of ties, especially with Asia will be more positive than in the past ten years.’
Author: Sithembile Shabangu