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Coronavirus in South Africa: How will it affect businesses?

As South Africa becomes the latest country to record a case of the novel Coronavirus, the month-long fear residents have been harbouring seems to have become real.

The Ministry of Health reports that a 38-year-old man who returned from Italy recently has been confirmed as patient zero.

After self-quarantine for several days, he is now in the hands of medical workers in KwaZulu-Natal, and the whole nation holds its breath, hoping no one else has caught the virus.

The patient, according to the National Institute of Communicable Diseases, tested positive on March 5 after arriving four days earlier with his wife and eight other people from Italy.

Having consulted with a private general practitioner on March 3, he is said to have exhibited symptoms that include a headache, fever, cough, malaise, and a sore throat.

Nonetheless, the Emergency Operating Centre has already identified those he came in contact with and have, consequently, deployed a team of epidemiologists and clinicians to KwaZulu Natal. At the same time, the doctor in charge remains in isolation from the public.

Known to thrive better in colder regions, the Covid-19 virus may find a favourable home in South Africa as the weather gradually becomes colder in anticipation of winter, compared to warmer climates in the Western and Northern parts of the continent that have also reported similar cases.

Should business owners in South Africa be worried about Coronavirus?

coronavirus in south africa

The novel Coronavirus (COVID-19) is a significant threat to the global economy since its first outbreak in December 2019 in China. By a large margin, China remains one of Africa’s most important trade partners.

A live update shows that over 94, 000 cases have been reported globally. Still, Africa has so far recorded the lowest number of people affected by the virus, perhaps because of the warmer climate.

However, the increasing spread of the virus, which has both human and economic implications, is a great challenge to emerging markets and economies in Africa.

If not swiftly and decisively contained, the prolonged effects will cut across Africa’s markets and economies, dragging down the GDP value of whole countries and regions. This will result in a disruption of the fragile intercontinental supply chain, costing businesses huge losses as they will find it challenging to trade normally for a long time.

Exposure of South African companies to the global effect of Coronavirus

south africa coronavirus manufacturing

The global stock markets had just last week, suffered huge losses as news of Coronavirus (and more deaths) spread, wiping out the market value of stocks to the tune of $5trillion. Trailing the drop in American shares, European shares also dropped by 3%, and the Asian market dropped by an average of 4.3% (majorly fueled by the markets in China, Japan, and South Korea).

Markets are plummeting due to a sustained sell-off by investors on fears arising derived from the widespread cases of the virus and the attendant deaths around the world.

On March 2, the Johannesburg Stock Exchange plunged by as much as 2.6%, which is the worst decline in more than eight months and a sign that the current and post Coronavirus implications may have a significant effect on South African businesses in the medium term.

Also, there have been growing concerns about SA businesses’ level of preparedness for the expected challenges and consequences, considering the shaky nature of the economy. This fear is not unfounded given the heavy reliance of the South Africa economy on Chinese manufacturing and export.

Analysts agree that, on the other hand, a weaker Chinese economy will have less demand for South African minerals and agricultural products.

It is also expected that the $8.5 billion economic trade investment export (both government and private export) from South Africa to China will be threatened and the spiral effect may further widen the budget deficit.

Tourism and travel will suffer, thanks to Coronavirus

South africa coronavirus

As one of the top travel and tourism destination in Africa, Mzanzi is certain to record some reduced income in that sector.

In the face of SAA’s mounting debt, sustained rate of insecurity, Eskom’s continuous load shedding, and a myriad of other challenges besetting the nation, the news of a confirmed coronavirus case will only worsen the situation.

While the tourism industry is still optimistic about receiving some appreciable number of visitors from all over the world, there is no doubting the fact that the number will drop drastically.

Further to that, a key chunk of those visitors who usually come from China – and other parts of Asia – are expected to stay put in their homes, irrespective of the fact that the Lunar New Year celebrations have ended and millions of Chinese citizens are supposed to begin travelling abroad again.

Undoubtedly, the tourism sector will be one of those that will be severely hit and may lose the patronage of an estimated 100, 000 yearly Chinese tourists who come over for business, holidays and sightseeing.

Additionally, the travel restrictions and other similar stringent measures put in place by different governments across the world means the aviation industry will also be one of the hardest hit as the laboratory scientists and researchers labour day and night to find a vaccine to curb the spread of the virus.

Coronavirus: Local South African manufacturers may profit; yes?

SA coronavirus manufacturing

Amidst the current and projected effects of the Coronavirus on South Africa businesses, Lasher (a local SA tool-making company) stated that there had been an increase in business demands since the closure of several Chinese manufacturing and public infrastructure in an attempt to curtail the spread of the virus.

This is no surprise considering the massive volume of imports South Africa sources from China (and Japan, South Korea, and a few other Asian countries currently in the frontline, battling the coronavirus pandemic).

In effect, indigenous eCommerce stores like Chrome, Takealot, Superbalist, and several others in the country may find it a bit difficult fulfilling orders from buyers.

While it may be bad news for these stores (who depend on imports to a considerable extent), local manufacturers are expected to smile to the bank – at least until restrictions on global trade and travel are relaxed once again.

Conclusion: The government cannot afford to fail 

south africa government coronavirus

The nation counts on the ANC-lead leadership in Pretoria to step up and be counted; millions of South Africans are hoping that the Rainbow Nation will, like Nigeria swiftly dealt with its lone Ebola case a few years ago, decisively contain the reported case of Coronavirus and also shore up inbound immigration checks at the borders.

In any case, local manufacturers and producers of goods and services now have an opportunity to boost sales by filling the gap China has inadvertently left open.

The likely downgrading to junk status by Moody’s, the current recession and slow growth all combine to put the country on notice.

South Africa cannot afford any lax in its effort to arrest a possible Coronavirus spread to avoid a full-scale breakout of the pandemic which may cripple the economy and further stall economic growth.

Coronavirus Patient Zero has gifted the nation an opportunity to reduce importation, and instead, empower local manufacturers to grow the economy.

Now is the time for the SA government to begin thinking about how to urgently review and implement all necessary policies that will strengthen proudly South African brands and products.

End!

With contributions from Temitope Banjo, a postgraduate student at Regenesys Business School, Sandton Johannesburg.

 

 

 

 

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