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2020-03-26 no comments All news, New Views: 329

A Perfect COVID-19 Storm Closes in on South Africa

The South African government’s recently announced austerity budget is no longer tenable as the calls for fiscal stimulus increase alongside growing COVID-19 concerns.

The high incidence of HIV and chronic lung diseases in South Africa, especially among the country’s poorer and uninsured populations, could allow for the virus to spread quickly.

Such a widespread outbreak would further strain the already limited capacity of the country’s health care sector, while also exacerbating racial and income inequality. 

To mitigate the imminent economic and political fallout, the South African government will have little choice but to cave to some of the demands of public unions, such as delaying proposed wage cuts in the public sector.

South African President Cyril Ramaphosa (center) addresses the media in Pretoria after concluding a meeting with various business and political leaders on matters relating to the COVID-19 outbreak on March 22, 2020. 

South African President Cyril Ramaphosa (center) addresses the media in Pretoria after concluding a meeting with various business and political leaders on matters relating to the COVID-19 outbreak on March 22, 2020.

With only 709 confirmed coronavirus cases as of March 25, South Africa may be lagging a few weeks behind the outbreaks now unfolding in Europe and North America. But when the pandemic does eventually hit the country, it will hit hard. With high rates of people living with HIV or tuberculosis, much of South Africa’s population is immunosuppressed and thus believed to be at risk of dying or in need of significant medical care if they contract the virus. Such a widespread outbreak could, in turn, quickly collapse the country’s already fragile health care system and economy, forcing the government to abandon its new austerity budget for expensive relief efforts.

While there’s never a good time for a pandemic, the timing could not be worse for South Africa. Pretoria had hoped to restrain spending in 2020, but a coronavirus-induced economic crisis will now force the government to reconsider its plans. Moreover, a widespread outbreak risks quickly overrunning South Africa’s health care system due to the country’s large at-risk population.

Ripe for an Outbreak

The quick spread of COVID-19 in South Africa is starting to mirror that of other countries. South Africa reported its first case of the virus on March 5. Ten days later, Pretoria declared a state of disaster for the next three months following the first reported case of local transmission. The number of coronavirus infections in the country has since grown quickly, rising to 202 on March 20 and then doubling to 402 just three days later on March 23, and is expected to continue rising.

The country of South Africa – and Southern Africa more broadly – may also see a more significant impact due to the region’s already high prevalence of chronic and often life-threatening diseases. The United Nations estimated that South Africa had 7.7 million people living with HIV in 2018, or roughly one in five South African adults. Moreover, many of the country’s miners have long suffered from silicosis, a lung disease caused by inhaling crystalline dust particles (which led to South Africa’s largest class-action settlement with mining companies in 2018). South Africa also has one of the world’s highest rates of diabetes as well as above-average infection rates for tuberculosis, which, like COVID-19, is an infection that mainly affects the lungs. To make matters worse, South Africa’s mining belt is also the region hit the hardest by tuberculosis, as it’s often caused by silicosis and HIV.

The Cracks in the Foundation

South Africa’s large at-risk population and the likely spread of COVID-19 risks quickly overrunning the country’s health care system as well. Like other sub-Saharan African countries, South Africa has a significant shortage of medical personnel, supplies and facilities relative to the size of its population. The country is estimated to only have about 7,000 hospital beds, with occupancy rates estimated to be around 80 percent for public sector hospital beds and 50 percent for private sector beds. According to the World Health Organization’s latest estimates, South Africa also has only 9.1 doctors per 10,000 people according to the World Health Organization’s latest estimates. And while this number is relatively high for sub-Saharan Africa, it pales in comparison to Western countries that have already seen their hospital staff and doctors overrun with COVID-19 patients.

South Africa’s health care system is also characterized by extreme inequality, which will exacerbate the COVID-19 crisis. The country has both public and private health care systems, the latter of which generally have more capacity and resources, including the majority of South Africa’s doctors, and is of higher quality. In Statistic South Africa’s 2018 General Household Survey, just 16.4 percent of South Africans said they had health insurance. And accordingly, more than 70 percent of those surveyed also said they would go to a public hospital, doctor’s office or clinic first if they had an illness.

The rates of South Africans with health insurance are also largely divided along racial lines: 73 percent of the country’s white population is estimated to be enrolled in a health insurance plan, compared with just 10 percent of South Africa’s black population. And the same also applies to the country’s HIV rates, with almost a quarter (20 percent) of black South Africans between the ages of 15 and 49 estimated to have the virus compared with just 0.5 percent of white South Africans in the same age group. The vast majority of South Africa’s most at-risk population for needing significant medical care if they contract COVID-19 are thus more likely to be uninsured, meaning there’s a high chance that South Africa’s public health care system will be overrun.

Bad Economic Omens

With such a fragile health care system and highly susceptible population, it’s perhaps no surprise that President Ramaphosa has acted aggressively to flatten the outbreak’s curve in the hopes of reducing the burden on the country’s limited health resources. By effectively shutting down business activity for at least three weeks, however, his recently announced lockdown risk taking a severe toll on South Africa’s already struggling economy, which only saw one quarter of economic growth in 2019. To help mitigate some of the financial fallout, the country’s central bank announced March 25 that it was introducing a government bond-buying program to improve liquidity. But even with such efforts, a sharp economic contraction in the first half of 2020 now looks increasingly unavoidable for South Africa, given the likely massive health and financial impacts of a widespread COVID-19 outbreak.

Prior to the COVID-19 crisis, Ramaphosa’s government was prepared to manage the country through an expected financial crisis and continued economic malaise in 2020. Pretoria had planned significant bailouts for embattled state-owned enterprises (SOEs), such as South African Airways and the utility company Eskom, as part of a new effort to restructure SOE governance and consolidate them. But while lockdown efforts to contain the outbreak may help give Eskom some breathing room by reducing demand for power generation, there will now be significant pressure on the South African government to respond with fiscal stimulus measures that fly in the face of its recently announced austerity budget.

As part of this budget, Pretoria had proposed extensive spending cuts, even as it took on increased debt to finance its large fiscal deficit, to avoid further hits to the country’s currency and credit ratings. This included a controversial move to renegotiate the current three-year wage agreement for public workers, which expires next year. The country’s labor unions have since rejected the cuts, with the Confederation of South African Trade Unions (Cosatu) warning that if the government followed through with the cuts it would be a “declaration of war.» A showdown over the issue could come on April 1, when the current three-year wage agreement calls for public wages to have a cost of living adjustment. Quarantine efforts to contain the COVID-19 outbreak will temporarily mitigate the risk of actual protests in the streets, but the proposed wage cuts could still lead to an immediate political crisis should it prompt Cosatu to pull its support of the ruling African National Congress party entirely.

A widespread COVID-19 outbreak among South Africa’s large immunosuppressed and uninsured population could quickly collapse the country’s already fragile health care system and economy.

Indeed, this speaks to a greater political dilemma Ramaphosa and his ruling party now find themselves in, as the lack of access to private health care providers will hit the ANC’s support base of primarily black and lower-income South Africans particularly hard. Amid the potentially massive economic and humanitarian fallout of the COVID-19 crisis, Ramaphosa’s government will face even greater pressure from voters, as well as labor organizations and the rival leftist Economic Freedom Fighters (EFF) party, to boost the public sector and back more so-called «pro-poor» growth measures.

This will force the ANC to move further toward the left in economic and health policy to solidify support among those who are the most likely to be more susceptible to the disease itself and seek public medical care. Otherwise, it will risk losing those voters to the EFF, which recently proposed a five-point plan to respond to the coronavirus risk, including calls to suspend repayment of car and personal loans for four months and a one-off payment to public workers for food and hygiene essentials. But by forgoing planned austerity measures and spending more on health care, this will only further South Africa’s economic downward spiral, making it all the more difficult to recover once the current COVID-19 crisis eventually subsides.


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