14 April 2020
Global independent owner-managed strategy and investment consulting firm Singular, has released their South African Health & Economic crises research to provide decision makers with a concrete and focused view on how the crises in South Africa could develop over the next weeks and months. Singular is a Consortium Partner [alongside IQbusiness, Schindlers, Engaged Business Turnaround, Sirdar and Envision] in the COBRA (COvid Business Rescue Assistance) Initiative.
The situation surrounding COVID-19 is dynamic and rapidly evolving, daily. The research offers practical ideas on how businesses can react to the threat and some opportunities that could lie ahead. The objectives of the research are to contribute to South African decision makers, by hypothesising an “in-the-making” viewpoint on the recent developments on COVID-19, possible first- and second-degree implications for the country and business.
Focused on the latest buzzword globally – COVID-19 – the research focused on various key “wild card” variables not considered as of now such as a COVID second (and third) wave, real ability to enforce a true lockdown in rural and poor communities, government relief packages which are still being shaped, the seasonality of the virus, the impact of broad-based anti-bodies testing and a gradual selective release of the economy.
The findings show that South Africa still has some way to go, in terms of testing. “Today SA is testing 4x less per capita per day than “best in class” South Korea, and the findings expect cases to grow as asymptomatic become symptomatic and additional testing is done. Taking lessons from some European countries, if lockdown is not managed well, SA could reach about 1 million “true cases” by end of June, of which only about 200 000 cases will likely be reported. This assumes SA could grow at the same rate as Italy, infecting almost 2% of the population by end of June. In this scenario SA will need about 26 000 critical beds (and currently has 6 000)”, the research stated.
The research found that the extended lockdown could see a real-term GDP contraction of 7-11% (year-on-year) under three potential scenarios of industry ramp-up. To recover 80% of this loss, it could take South Africa 3 to 6 years.
To add to this, government and consumers will likely continue social distancing post lockdown to prevent undetected cases from spreading (similar to what China is experiencing today). Lorenzo Tencati, Managing Director of Singular Africa, highlights that “businesses need to equip themselves to deal with and take advantage of some permanent shifts such as digitalisation & automation, reshoring of parts of value chains and new “e-winners” within retail, healthcare, finance, and education.”
Commenting on the results, Lorenzo Tencati said, “While the global health dilemma we are facing is likely to be overcome in the next 12-18 months, the economic situation is to be tackled and proactively addressed by every single business leader and decision maker TODAY to prevent the situation from spiraling into a prolonged depression”.