Coronavirus - Testing Times

For Africa’s two biggest economies already suffering ailing growth, Covid-19 has checked in at a vulnerable time.

- Godfrey Mutizwa

South Africa’s rand currency reached its lowest in more than four years while the composite Johannesburg Stock Exchange (JSE) All Share Index recorded its worst drop in 23 years after the World Health Organization declared the outbreak a global pandemic, wiping billions of dollars from the value of companies listed on Africa’s most liquid and biggest stock exchange.

And it’s been mostly downhill ever since. Business confidence in the first quarter of 2020 fell to a 21-year low, the Bureau for Economic Research reported, citing the prospect of slower or no growth at all in an economy that was already in recession in the last six months of 2019. At the time of writing, there were 116 confirmed cases and no deaths, according to the National Institute for Communicable Diseases in South Africa.

“I am worried,’’ said Ian Kirk, Chief Executive Officer of Sanlam, Africa’s biggest insurance business which operates in 44 countries, to FORBES AFRICA. “To the extent that world growth starts impacting on our growth negatively, that does concern me. I think it’s a two-quarter thing but no one knows at this stage.’’

Most South African economists, the government and the International Monetary Fund (IMF) had forecast growth in Africa’s second largest economy to come in below one percent this year as the country struggles with depressed investment due to power shortages and policy uncertainty over the government’s land reform program.