While South Africa’s first batch of one million Covid-19 vaccines arrives in the country on Monday (1 February), economists warn that the process is far more complex than rolling them out to the population.
In its weekly research note, the University of Stellenbosch’s Bureau of Economic Research (BER) highlighted some sticking points with the Covid-19 vaccines, mainly around the logistics of storing and distributing them to the population.
Good News:
The good news for South Africa is that the latest virus metrics from the Department of Health indicates that the peak of the second wave has passed, with an easing of lockdown restrictions likely to follow.“If current trends are sustained, Salim Abdool Karim, government’s top Covid-19 advisor, indicated that relaxation of some of the current restrictions would be warranted. Indeed, speculation is growing that President Cyril Ramaphosa could address the nation this week, presumably to announce an easing of some of the Level 3 lockdown regulations,” the BER said.
Also positive is that the first one million doses of the Covid vaccines from the Serum Institute of India (SII) arrive in the country.
The BER said that the arrival of the vaccines is undoubtedly positive for South Africa, and with the announcement that a further 20 million doses of the Pfizer Covid vaccine have been secured, the country will have around 42 million shots available – enough to inoculate 70% of the population.
Notably, the Pfizer vaccine has proven to be effective against the local variant of the Covid-19 virus, which has spread rapidly among the population.
Bad News:
However, the BER noted that the good news comes caveats.Firstly, the SII vaccines will not be available immediately. “Unfortunately, it will reportedly still take up to two weeks for the vaccines to be cleared before distribution to the provinces will kick off,” it said.
The rollout to frontline healthcare workers is projected to run through February and March, and may even overlap the phase two rollout of vaccines, which targets vulnerable populations.
The second issue is with the additional 40 million vaccine doses that the government claims to have secured.
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| South Africa’s Covid Vaccines – Good and Bad News |
This is also against a backdrop of how higher-income economies are performing and sometimes struggling with their vaccination strategies. Countries like the US and UK, which have been vaccinating populations for months, are only picking up the pace now while facing other challenges.
The US is now inoculating about 1.6 million people daily. In Israel, at least a third of the population has received at least one jab of the vaccine and about 20% is fully vaccinated.
In the UK, about 13% of the population has received at least one shot, but the wider EU is still scrambling amid shortages of vaccines and appropriate ‘shot utensils’ such as needles and has threatened export controls of vaccines, the BER noted.
South Africa, meanwhile, hasn’t even started its rollout, and virtually no other information on contingencies and backup plans has been communicated.
2022 Recovery:
Given the slow start, expected delays, lack of transparency, and poor track record, economists and financial groups like the International Monetary Fund (IMF) are not optimistic about South Africa’s prospects in 2021 and expect the country to only recover in 2022.The IMF warned last week, that virus-related perils are particularly relevant for South Africa and form part of its baseline outlook for the country instead of it merely being seen as potential downside risks.
“As such, despite the more upbeat global picture, the IMF lowered its 2021 and 2022 real GDP growth forecast for SA. The fund cautioned that in addition to long-standing structural constraints and vulnerabilities, the so-far relatively slow vaccination procurement and distribution plans in SA will negatively impact growth,” the BER said.
“Due to the slow vaccine roll-out, the broader domestic demand recovery is only expected to pick up momentum through 2022.”
The recovery in consumer spending is foreseen to be very slow, while the private sector fixed investment is likely to contract once again in 2021, the BER said.
“Declining government expenditure as Treasury aims to wrestle back control of SA’s deteriorating debt position and possible – more severe – Eskom load-shedding is also expected to constrain the growth momentum.
“However, we are more optimistic about next year, as relative to earlier expectations and hopes, some of the GDP recoveries is in essence delayed to 2022,” it said.
