Johannesburg, South Africa – President Cyril Ramaphosa has urged South Africans to “roll up their sleeves” to help rebuild the country’s shaky economy as he announced the withdrawal of most of the COVID-19 restrictions.
The facilitation, which will begin at midnight on Sunday, will see larger social gatherings allowed, extended hours for the sale of alcohol, a return from next month on international travel under strict conditions as well as the full reopening of major industries such as construction and manufacturing.
Government directives to wear face masks in public and to monitor physical distance remain in place along with a national curfew – albeit only for four hours from midnight to 4am.
In a televised address to the nation Wednesday night, Ramaphosa said the first wave of the coronavirus pandemic has been defeated and now is the time to revive economic activity.
“Our economy and society have suffered great devastation. We have endured a savage and devastating storm,” he added, noting that the number of new infections had dropped from an average of 12,000 a day in July to less than 2,000.
The shock of GDP
The government in late March began implementing one of the strictest blockades in the world aimed at stopping the spread of the coronavirus. All sectors of the economy deemed unnecessary were closed as part of a series of drastic measuresunder a five-tier risk system.
South Africa eases stalemate to revive economy
Already in a recession before the pandemic hit, official statistics last weektoldthe economy shrank at an annual rate of 51 percent during the second quarter of 2020 – the worst quarterly collapse recorded. If the results of the second quarter are not annual, the country’s gross domestic product (GDP) shrank by 16.4 percent.
Among the financial sectors hardest hit were construction, manufacturing and mining, with each declining76.6 percent, 74.9 percent andRespectively 73.1 percent. Meanwhile, personal services including hospitality fell by 32.5 percent.
Despite efforts in recent months to gradually reopen the economy while administering COVID-19 infection rates, the sharp devaluation of South Africa’s fiscal position has sparked long-standing concerns about high unemployment and poverty in the world’s most unequal society.
“I have an education – a qualification in mechanics. But here I am, trying to sell cigarettes illegally to survive,” Brian Mgidi told Al Jazeera from a deserted corner in Melville, a fashion suburb in Johannesburg that usually buzzes with restaurants and cafes.
With more than 650,000 coronavirus infections and 15,000 deaths associated, South Africa is the most affected country on the continent.
“Just as we acted together to defeat this virus, we must roll up our sleeves and get to work to rebuild our economy. We have a mammoth task ahead of us,” Ramaphosa said in his speech.
The president said comprehensive details of efforts to revive the economy will be revealed in the coming weeks following negotiations between the government and South Africa’s business and business sectors.
‘What we need is action’
In a statement last week, Minister of Finance Tito Mbowenisaid“The magnitude of GDP contraction underscores the need for fiscal and economic reforms to increase confidence and boost growth.”
But critics say promises of action come too late and empty after the government’s initial $ 30 billion coronavirus stimulus largely fell as the country’s banks were reluctant to lend government-guaranteed loans to businesses on the verge of collapse as a result of the pandemic. At the same time, funds earmarked for fighting the virus were reported to have been fraudulent corruption.
“Even before this crisis, the economy was in a mess and with the government just talking they are only making things worse,” Iraj Abedian, an economist at Pan-African Research and Investment Services, told Al Jazeera.
Analysts believe boosting competition and curbing runaway public debt – which is expected to grow above 80 per cent of GDP this year – is crucial to turning South Africa’s fortune.
“Over the past decade, the country’s fiscal position has been analyzed to the death and what we need now is action – nothing more and nothing less.”
South Africa warns COVID-19 crisis could wreak havoc on tourism industry
Politicians and businessmen affiliated with the ruling African National Congress have been implicated in scams involving the supply of personal protective equipment to the government. Ramaphosa previously promised swift action against anyone accused of coronavirus-related corruption but to date, no arrests have been made.
“If we are to experience a turnaround, the private sector will have to secure massive capital investment. This simply will not happen with uncertainty and corruption,” Abedian added.
The consequences of government inaction have been accelerated by the economic downturn brought on by the coronavirus pandemic – and experts warn of a potentially bleak outlook.
“The possibility of social unrest is now a real and present danger – people are desperate,” Isaah Mhlanga, chief economist at Alexander Forbes, told Al Jazeera.
“South Africa does not even want to think about the economic devastation that awaits if drastic and swift action is not taken soon.”
Most of the announced reforms depend on changes in the country’s poor energy sector. Despite silent economic activity, state-owned energy company Eskom has been forced to implement rotational outages to prevent a complete collapse of an overdue and sustained national electricity grid.
“Eskom is in dire need of sales revenue that they just can’t generate,” energy analyst Ted Blom told Al Jazeera.
“COVID-19 could have presented an opportunity to undertake critical work to repair Eskom’s old fleet. But both personnel and suppliers refused to work or were forced to close during the blockade.”
South Africa restores blockade amid rising COVID-19 cases
If this decline continues, it will not only be catastrophic for South Africa but for the entire South Africa-dependent region for two-thirds of it GDP.
Many migrants working in the country have fallen into difficult times, losing their jobs and not being able to send remittances to hungry family members or even return home due to coronavirus-related travel curbs. .
“I was fired in March as a result of the pandemic. There is no money left for my family in Harare and we are fighting here,” Al Jazeera told Zimbabwean expatriate Mandipha Nleya, who lost her job as a teacher. garden.
“I just had to make the most painful decision I do not wish on any parent: Decide which of my children would continue school as I can no longer afford both.”
Construction contractor Brian Simon said the poor economic situation has created deep uncertainty but the reopening of the economy was a beacon of hope.
“You can not give up,” said Simon, who is now sclashes to complete the work he started in early 2020.
“South Africans never have, so there’s no point in starting now.”
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