The COVID-19 pandemic is the biggest disruption to the global economy and has forever changed the business landscape. Experts agree that a global recession is eminent and is due to last for a while. Even the world’s healthiest economies now face negative growth rates and developing economies find they lack the financial resources to accelerate recoveries. South Africa, in particular, is already experiencing a recession due to pre-existing financial stressors and the South African Reserve Bank forecasts that the economy will shrink by 7% in 2020. Bleaker estimates from business grouping Business 4 SA have said the decline could be between 10% and 16.7%, depending on how quickly SA’s economy reopens.
So, what does our economic future look like in the face of COVID-19? This was debated by leading specialists Hilary Joffe, Contributing Editor of the Business Times and Sunday Times; Mariëtte du Toit-Helmbold, Chief Destineer of Destinate; Jacob Maphuta, Chief Director of Broad Based Black Economic Empowerment of the Department of Trade and Industry; and Gaylor Montmasson-Clair, Senior Economist of Trade & Industrial Policy Strategies , participants in the Absa Business Day Supplier Development Dialogue Series hosted on 26 March 2020, in partnership with Fetola, Cold Press Media, and Arena Holdings.
Panellists agreed that our growth outlook shows a decline and that South Africa will come out of the COVID-19 crisis poorer, with much sharper inequality and unemployment, and public finances depleted, leaving us reliant on limited resources to support the social needs of society
“There is no precedent for the recession and we won’t get back to where we were before 2023. Our future economic prospects depend largely on how quickly we come out of lockdown, how we navigate our way out, how much damage is permanent, our capacity lost and essentially our ability to recover” said Joffe. “Recovery will also depend on how much attention we give to policy and fiscal reforms we have spoken about for so long. Government must create an enabling environment to unblock blockages that don’t make us competitive, to foster a conducive environment for business and the private sector to invest, innovate and thrive, and to support and reignite growth.
The collective sense was that the crisis yields unique opportunities. “The positive thing about crisis is that it has brought us closer together- across sectors to focus more sharply on some of the things that need reprioritizing” said Maphutha.
Montmasson-Clair advocated for a paradigm shift in favour of a green and just economic recovery strategy and a need to start setting up capacity and systems to build a more resilient economy and “build back better” in the post-pandemic future.
Seven potential gamechangers for our path to recovery were identified by panellists, these included:
- Collaboration: build partnerships and platforms for cooperation between government, small business and the private sector, such as the Absa Business Day Supplier Development Awards
- Localisation: rethinking and restructuring of our value chains to maximise resources and value within South Africa. Localisation of production/ manufacturing, vertical integration of supply chains, and linkages for rural and township economic development.
- Inclusivity: stimulate economic activities in marginalised areas and rural and township economies to address inequality, transformation and the participation of small businesses and black industrialists in the economy.
- Competitive edge: Be ruthlessly price efficient by reducing cost of production and seize export opportunities through proactive identification of demand and market gaps to capitalise on our weak exchange rate. Link this to Sustainability and “green production” to meet growing post-COVID-19 global pressure for climate friendly production.
- Smart infrastructure: Building smart systems, smart grids, rail networks, smart water and sanitation systems; networks of infrastructure systems to meet local demand and drive job creation
- Sustainability, Climate resilience and Low carbon production: protect our ecological infrastructure and communities, including access to sustainable services, such as water, sanitation and public transport; low-carbon production and renewable energy technologies, which stimulate local manufacturing and the development of local supply chains.
- Digital: maximising the online economy and address the digital divide with rapid deployment of broadband to stimulate innovation and growth, capacitate emerging businesses and fast track equal opportunities.
Moderator, Catherine Wijnberg, CEO Fetola highlighted that whilst there is no silver bullet, we can’t afford to go back to business as usual. The crisis presents an opportunity for us to create a different future. Key would be to build trust, be agile, efficient and effective. “This is our recovery!” concluded Wijnberg.
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