The Economics of Covid-19 in South Africa: Early Impressions

South Africa’s efforts to contain the Covid-19 pandemic have been relatively rapid and comprehensive by international standards. The number of confirmed cases passed 100 – a basic benchmark in the progression of the epidemic – on 18 March 2020. Three days prior to this a National State of Disaster had already been declared, and on 26 March the country was placed under a complete national lockdown for five weeks1. The lockdown was extremely stringent, restricting all individuals’ mobility to essential travel only, prohibiting the sale of alcohol to take pressure off the public health system, and making no allowance for any non-essential activities outside the home including walking and basic exercise. This essentially brought most economic functions across the country to an immediate halt, apart from a set of essential services including healthcare, security, agriculture, and the transport of selected goods. Following these various interventions, and after an early exponential increase in confirmed cases, the spread of the disease at the time of writing appears to have slowed temporarily. Figure 1 thus shows the number of confirmed cases for South Africa alongside four comparator countries, where the vertical line marks the introduction of the lockdown in South Africa, after which a gradual flattening of the curve is evident. Figure 1: Trajectory of Cumulative Confirmed Cases Source: Compiled using data from Our World in Data. Data as of 29 April 2020. Notes: Vertical line = introduction of national lockdown in South Africa. The available evidence appears to confirm that the country’s uncompromising lockdown, combined with effective contact tracing for the early cases (mainly Europeans or South 1 The lockdown was initially set to be three weeks but was subsequently extended for a further two weeks. The Economics of Covid-19 in South Africa: Early Impressions Africans returning from Europe), helped prevent uncontrolled local community transmission during these early stages of the pandemic. It is important to note however, that this early effective response will not, according to the available health modelling outcomes, result in a decline in the absolute number of cases. Instead, what the early lockdown has done is to allow the South African government time to prepare for what will inevitably be an exponential rise in Covid-19 infections after the complete lockdown ends.