Prof Daniel Meyer, a Full Professor from the College of Business and Economics at the University of Johannesburg (UJ), recently penned an opinion piece entitled ‘Private sector must be allowed on board the vaccination wagon as we brace for the third Covid wave‘, published on the Daily Maverick on 25 March 2021.
To vaccinate the whole South African population by the end of 2021, we need to vaccinate about 142,000 people daily. This is only possible if we establish vaccination centres across the country and allow the private sector to manage the process. A successful vaccination process is central to economic recovery.
Europe is experiencing a third wave of Covid-19 which is even more devastating than previous waves, most affecting countries such as France, Italy, Germany, Poland, Hungary and Slovakia. These economies are severely affected by hard lockdowns. A third wave scenario for South Africa seems inevitable, starting at the end of April/beginning of May 2021. The daily infection rate has already begun to increase in six of the nine provinces.
The economic impact of a third wave will negatively affect the economy, which was already showing signs of recovery with a few “green sprouts”, including motor vehicle sales.
Since mid-2020, health analysts stated that one immediate solution to eradicate the virus is immunity through vaccination. The race towards herd immunity or even full immunity via Covid-19 vaccinations has started on a global scale. Several approved vaccinations are now available, including those from Johnson & Johnson, Pfizer, Moderna and AstraZeneca. The World Health Organisation (WHO) reported that 447 million people globally had been vaccinated to date, with at least one dose, and more than 100 million people have been fully vaccinated.
In South Africa, as of 24 March 2021, 207,808 people, mostly health workers, have been vaccinated to date, translating to 0.35% of the total population. The first person was vaccinated on 17 February 2021.
As of 24 March, an average of 6,703 people have been vaccinated daily. If we continue at this vaccination rate, the nation would be 100% vaccinated over a period of more than 16 years, according to Media Hack’s calculator.
Therefore, the vaccination process in South Africa needs to be accelerated if we want to stay in the race and not be left behind. In the US, for example, more than two million people are vaccinated daily. The EU has vaccinated 3.8% of its population to date. Israel leads the vaccination race at 51% of the population, followed by the UAE and the US. Africa is lagging, and only a few countries such as Rwanda, Morocco and South Africa have begun with large-scale vaccination.
The question that needs to be asked is whether the South African government can successfully manage the roll-out of the vaccination process independently, with a struggling health system or via a public-private partnership with the private healthcare system in support?
Well, the quick answer is no. The government cannot handle this vaccination process on its own. President Cyril Ramaphosa, in his 2021 State of the Nation Address, stated that public-private partnerships are now more vital than ever for economic recovery. The private sector must be allowed to administer vaccinations. To vaccinate the population by the end of 2021, we need to vaccinate about 142,000 people daily. This is only possible if we establish vaccination centres across the country and allow the private sector to manage the process. We also need to secure the doses as a matter of urgency. A successful vaccination process is central to economic recovery.
The national Department of Health has a target to vaccinate 67.25% of the population or 40 million people to achieve herd immunity. In the current phase, 1.25 million health workers will be vaccinated, followed by about 16 million people — essential workers, elderly people, people with co-morbidities, and people in care facilities.
The last phase includes 22.5 million people older than 18. The Health Department’s estimated cost of the roll-out plan is about R20.6-billion. Logistically, the roll-out plan is complicated due to the various vaccines’ storage facilities regarding record keeping, temperature management and security. The development of a safe and secure data tracking system is also essential.
The risks need to be minimised of a failure to deliver the vaccines efficiently over the next 12 months. Otherwise, South Africa will be left behind in the vaccination race and isolated. We are already behind our major trade partners. Africa as a continent also seems to be behind the rest of the world. However, many African countries did not experience as substantial an outbreak of infections as South Africa. Some African countries have received large quantities of vaccines over the past months as donations.
If South Africa falls behind in the vaccination process, and this seems to be the current scenario, this will have a severe negative impact on the economy.
First, we could experience multiple Covid-19 waves — the insurance industry is predicting at least three additional waves over the next 12 months. A rapid vaccination process could eliminate at least one of the three expected waves.
More waves will have a negative impact on the economy as a whole. Lockdowns associated with pandemic outbreak waves lead to devastating effects on the GDP. This means in the second quarter of 2021, and possibly the last quarter of 2021, we could experience such waves, depressing our economy and leading to another year of low growth.
Wave one continued for about 20 weeks at levels 4, 3 and 2 and affected GDP in quarters 2 and 3 in 2020. Quarter 2 had a 22.8% decline when using 2019 as the base year, while quarter 3 had an 8.1% decline. Wave 2 started three months after wave 1 and continued for 14 weeks affecting quarter 4 of 2020 and quarter 1 of 2021, having a negative impact of 4.1% on GDP. The third wave will then affect quarters 2 and 3 in 2021. It would have an impact of between 8% to 4% on the economy depending on the level of lockdown imposed. Ratings agencies already have a negative sovereign risk outlook for SA.
Another year of low growth will result in further downgrades in the already junk status environment with low investment levels. Low growth will put additional pressure on tax collection and government debt.
Second, more waves could ultimately destroy the tourism sector, which contributed close to 10% to GDP before Covid-19 and contributed 10% of jobs in SA. More pressure on tourism through renewed lockdown will be the final nail in the coffin for the tourism industry. Its contribution to the GDP could be reduced to below 5%.
Third, falling behind in the vaccination race will eventually also affect our exports and international trade as our trade partners could find virus-free zones to trade with rather than a virus-infected region such as southern Africa.
Fourth, sport is a significant industry that connects us to the rest of the world. Isolation will affect the quality and marketability of our sport and have a major economic impact due to no international visits, rendering our sport less competitive with leading sportspeople leaving our shores for virus-free countries.
When looking at all the facts, we need an urgent and clear implementation roll-out plan to avoid the risk of isolation and resulting economic disaster.
*The views expressed in the article is that of the author/s and does not necessarily reflect that of the University of Johannesburg