South Africa is undergoing one of the harshest lockdowns in the world. It has become clear that the economic effect of this lockdown has been very severe. The question we have to ask is, is it worth it?
A few weeks ago, we learned about the tragic death of a local opera singer. He committed suicide. While we can never know the real reasons behind a sad event such as a suicide, we can infer that being isolated and not being able to perform and earn a living for months on end can push someone to take their own life, especially those with underlying mental health problems such as depression. At the moment, we have no statistics relating to recent suicides, but it’s safe to assume that it would be higher during lockdown than it would have been under normal circumstances.
Another concern is the decline in diagnosis and treatment of serious diseases such as cancer. We have statistics from the UK that show that monthly referrals from GPs for patients with suspected cancer plummeted from an average of around 200,000 a month to 80,000 in April. The average waiting time (also in the UK) for treatment, including surgery, has skyrocketed from less than eight weeks to more than 12 weeks. This deprioritisation of other serious conditions in favour of preparations for a surge in coronavirus cases will have the unintended consequence of shortening the lives of those who need treatment for serious diseases such as cancer which require urgent attention.
So, the question is, was it necessary to destroy our economy to be able to deal with this virus?
Most managers and businesspeople will be familiar with the 90/10 rule. This rule states that the first 10% of activity and costs will bring 90% of the results of any project, with the last 10% requiring 90% of the cost. This can also be applied to the response to the coronavirus. We could have achieved most of the benefits of dealing with COVID-19 relatively cheaply: wearing masks, washing hands, distancing, protecting the vulnerable and maybe cancelling big venue events. Instead, we went for a total lockdown which has now all but destroyed an economy which was already on life support.
The (in my view optimistic) official growth figure going around is that the economy will shrink by 7% this year. I’ve heard some economists say that the annual decline will be closer to 10%. We can normalise to 100, then take it down to 90 (the 10% drop in 2020). Even if our economy grows by 1% in 2021, we will only be back to 90.9. Assuming that we maintain a 1% growth rate, it will take us 11 years (until 2032) to reach 2019 levels of output. I cannot emphasise enough how catastrophic this is.
Bear in mind that despite our economy growing by merely 1% per year, our population grows by around 2% per annum, and that if it wasn’t for the African National Congress’ anti-growth policies and misrule, our economy would be growing at 4%+ along with other emerging economies. South Africans are systematically becoming poorer and poorer. Our no-growth economy has essentially become a zero-sum game. The pie isn’t getting any bigger. For every winner there is a loser. For every additional product that your company sells, your competitor is selling one less. We have a government that doesn’t listen to reason and continues speeding down a bumpy road of very bad policies.
One thing is for sure: The next five years are going to be very tough, and the 2024 election will decide South Africa’s fate. You can’t help but get the feeling that if we don’t make the necessary changes then, the damage that another five years of ANC rule will bring will be irreversible.