In a South African perspective, there has been but a single life-changing socio-economic crisis in the past century that has had the kind of legacy which the Coronavirus is believed will have, and that is the taunting legacy of apartheid. With this in mind, Covid-19′ impact and subsequent aftermath will require a shift – a rebalancing of sorts particularly from an economic standpoint.
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Manzini Zungu |
The devastation brought on by the Coronavirus outbreak is nothing short of a global tragedy on human lives. Emerging markets and economies such as our own, have endured the brunt of asymmetrical pressure on our respective economies, leaving us no options but to explore practical measures to reset our economy.
The first and arguably the most crucial step in effectively resetting our economy is to get people back into economic activity. Resuming economic activity, in the context of a public-health system capable to detect and respond to new cases, something the South African government must be lauded for, is crucial in restarting our economy.
Although considered a leading emerging economy on the African continent, globally we are a developing country and realistically, we face the same socio-economic challenges as other emerging markets in our region. This position means that we need to ensure that ours in not to get ‘left behind’ when the global economy recovers.
The South African government’s unprecedented R500bn Covid-19 economic stimulus package to mitigate the desolation of the pandemic is similar to stimulus packages already effected by developed countries such as the United States, Germany, and the United Kingdom. President’s Cyril Ramaphosa’s interventions, specifically the R100bn that will be set aside to protect and create jobs and the planned R70bn in tax relief measures will garner the necessary preservation of entrepreneurs.
However, I believe that more strategic tactics in leveraging these interventions to make the SMME sector the bedrock of the South African economy are more pertinent. If there is one thing this pandemic has exposed, it is the basic need to transform our economy from a labour focused one to an SMME oriented.
As a labour intense economy, 25 days of non-activity, limited capacity and production have further cornered what was already an imprisoned economy in recession.
The constraints on key sectors such as mining, textile, and manufacturing; most affected by the Coronavirus pandemic has meant that our economy was never positioned to adequality adapt to the complete or partial shutdown.
This setting makes an economy structured on the proliferation of SMMEs that are catalysed to absorb and create employment at a similar scale to the major sectors of this country a mandate that we should undertake as a country. If we can build our SMMEs to operate at this level of operational capacity and build the sector to be a substantial GDP contributor, then we could genuinely be on a recovery path towards creating a level playing field for businesses in a post pandemic world.
Even though no one has been spared from the carnage of the coronavirus pandemic, the reality is, it’s been the small to medium sized business in specific industries that have demonstrated the agility to continue operating within the regulations of the lockdown, even by means of implementing frameworks such as digitising their services or having their employees work from home.
In contrast, the larger labour intense sectors have been hit the hardest, with no doubt of pending retrenchments looming to further deepen economic woes. Entrepreneurship at large scale and exceptional growth of our SMME sector is only one way of accomplishing a resilient economy.
The way we chose to emerge from the economic devastation of the Coronavirus present an opportunity for us to address the mistakes of the Codesa negotiations, that focused so much on political mechanisms of transitioning political leadership, while neglecting the radical economic transformation needed by our people, then and now.