Reflecting on 2020 and the road ahead

Posted in: Economics, i-Blog, South Africa on December 22, 2020


The great tragedies of the last century are usually about humans doing terrible things to each other. The natural world has been a relatively infrequent cause of large-scale death and destruction, at least since the 1918 Spanish flu. There have been major catastrophes such as the 2004 Indian Ocean earthquake and subsequent tsunami or the Yangtze River flood of 1931 that killed up to 4-million in China. But while these were devastating, they were not global and the death tolls much smaller than either World War.

Of course, this dichotomy of man-made and natural is a false one. It is our planning for natural threats and management when they strike that determines how destructive and tragic they are. Covid-19 has illustrated this sharply. Our lack of preparedness to manage the pandemic has been exposed.

The global impact of the pandemic has cast into relief that policy choices really affect outcomes. We have seen extremes, from the United States to New Zealand. There were three critical stages that each needed to be managed: the initial onset, handling secondary effects, and then the vaccine research and distribution programme.

The initial onset required fast decision-making based on rapid accumulation of evidence. China showed the lessons it had learned from past experiences, particularly Sars. According to The Lancet, China’s centralised epidemic response system kicked into gear early, moving very quickly to stop transmission. The disease was first detected in late December in Wuhan, and by 10 January 2020 China released the genomic sequence of the virus. Wuhan was immediately placed under a strict lockdown that lasted 76 days. Within weeks China had tested 9-million people in Wuhan and had set up an effective national system of contact tracing. By 5 February it was opening the first of over a dozen “Fangcang” hospitals in stadiums and other public venues to hold extra patients.

China has had 4,634 Covid-19 deaths and infection rates are now low. The United States, with a quarter of China’s population, has had 318,000 Covid-19 deaths and an accelerating and high infection rate. History will judge its mishandling of the pandemic harshly. A trifecta of political chaos, the libertarian culture at the heart of American life, and the geography of the country, combined to make it incredibly ill suited to manage the pandemic.

South Africa may shrug off these examples as providing little to learn from because they are large economies. But being a developing country is no excuse for being ineffective: Vietnam has been highly effective in managing the pandemic there. Its strict quarantine and contact tracing measures have worked. It has recorded just 35 deaths.

Vietnam has had previous experience of Sars and implemented a model response. Its government rapidly launched a communications campaign, including a viral song about the importance of hand washing. In mid March it made masks compulsory for all people outdoors. It implemented a strict nationwide lockdown on 1 April. It quarantined hundreds of thousands suspected to have Covid-19. It used pooled sampling – mixing the blood samples of five or six then testing it, going on to test them individually if there was a positive result, rapidly increasing the speed at which it could give the all clear to groups.

It has even developed four candidate vaccines domestically, one of which is in human trials. The economy has seen clear benefits: it will be one of the few in the region to grow this year, with the IMF expecting 1.8%. Government’s response has had 97% approval ratings in polls.

This provides some context on which South Africa’s performance can be judged. There are some achievement but other failures. We moved, initially, quite quickly in implementing a lockdown. We were not particularly well thought through out about it – particularly how lockdown can work in highly dense less formal settlements. There wasn’t good reason for this – thanks to the ARV rollout we do in fact have good distributed health information and support networks. These should have been part of the immediate response.

But we were particularly weak in the economic response. Among the relative strengths was the social grants and a cumbersome UIF system to support the most vulnerable. These could have been more targeted and efficient, but overall they did get money to where it was needed. However, we have been slow and halting in driving a full economic response. We were already on a weak footing with no fiscal space for government to move and an economy that has been shrinking in per capita terms for four years, but it was unacceptable that it took until late October to come up with an economic recovery plan. And the plan contains nothing that wasn’t known back in March – indeed, even earlier.

Now, we are risking our response on the health front too. While we were fast, if haphazard, in responding to the first wave, the second wave finds us being merely haphazard. With the second wave clearly accelerating, the interventions so far have been tentative and misfiring. The lessons of the first wave seem unlearned. Certainly, the economic damage of broad lockdowns has been learned, though the lesson hasn’t been to set down protocols and encourage businesses to adapt. Instead it has been geographic targets (which are better than indiscriminate national lockdowns) and somewhat random specific closures like beaches. Closing beaches is silly – it is human density that matters and open beaches can relieve density in other areas. Ban too many people on beaches, but not beaches full stop.

In the UK, an area-level approach has been taken, but currently most of the population has had all non-essential shops closed and households banned from visiting or meeting more than one person outdoors. Christmas plans of families across the country have been torn up.

The UK is recording daily infection three times the number of South Africa, but testing is far more widespread. The better indicator is probably the Covid death rate, which in the UK is twice that of South Africa.

We should be ruthlessly focused on limiting exposure – environments in which people gather densely, indoors and with limited ventilation. That is indoor socialising and entertainment, weddings, funerals and church services. But give businesses the opportunity to adapt. For example, suspend the bylaws on outdoor dining and encourage ecommerce. This is sometimes shrugged off as only an option in wealthy areas, but in fact township distribution networks work well and can be mobilised to support ecommerce. Even Kenya shops more online than South Africa. Policies that deal with the problem must be accompanied by policies that allow the economy to adapt in response. Economies are adaptive systems and they will shift if you provide the right incentives.

The other area we have not yet gotten right is vaccines. South Africa has embarrassed itself by missing payment deadlines on the global Covax initiative. We have, as far as anyone can tell, not even tried to engage with the large global manufacturers of vaccines about potential orders. Compare that to Vietnam which is trialling its own vaccines and Thailand which has signed a deal with AstraZeneca for 26-million vaccine doses and is in talks with Russia, China and India for more. South Africa’s financial position is no barrier to engaging with manufacturers. We have two local world class manufacturers in Adcock and Aspen which may be part of the solution as they were in the ARV crisis.

We are living with the consequences of our own policy choices. It is always difficult to get these right – they are highly contested with political factions and economic interest groups battling it out. But, as we know from confronting the Aids pandemic, we can start off badly and then pull together to end well. I hope 2021 is the year we can consolidate the lessons, understand our strengths, and really come together to put this crisis behind us. As other countries are showing, it can be done. Let next year be the year for South Africa.

This is going to be a strange Christmas for everyone, the strangest the world has seen for many decades. No matter the rules, the pandemic presents risks that will linger at the back of our minds. But it is an opportunity to rest and to reflect, to come to terms with the drastic impact the pandemic has had on all of us and prepare to come back invigorated. To all our readers and clients whom we have been proud to work with through this difficult year, I wish you all the best for the festive season. I look forward to working with you next year.

Best wishes,

Dr Stuart Theobald

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