A day of slashes and forecasts exposes shaky economics of lockdown

A day of slashes and forecasts exposes shaky economics of lockdown
A solitary cow lies in a deserted square in the Free State village of Villiers during the national lockdown. (Photo: EPA-EFE / Kim Ludbrook)

Things changed overnight in South Africa on 15 March, and it won’t be the last time it does. Daily Maverick’s Daily Digest will provide the essential bits of information about Covid-19 in South Africa each day. Please do read on to understand these issues more deeply.


In just one day, a number of economic changes happened with far-reaching effects on how South Africa’s lockdown will pan out.

First, the repo rate was slashed by 100 basis points for the second time in less than a month on Tuesday 14 April. The South African Reserve Bank announced the record low rate of 4.25%.

The prime lending rate for consumers is now 7.25%. The bank expects GDP to shrink by 6%. Three weeks ago, it estimated this to be 0.2%. Ed Stoddard explains why this move has been made.

Business for SA (B4SA) has predicted that the GDP could shrink by between 8% and 10% because of the fallout of Covid-19. B4SA is a coalition of business organisations coordinating interventions to support the economy during the lockdown and beyond. As Ray Mahlaka reports, their predictions are not finalised and not limited to GDP figures.


In addition, Finance Minister Tito Mboweni said that the Budget would need to be revised to account for the impact of the Covid-19 outbreak and lockdown.

He added that the country will not consider support from the International Monetary Fund which comes with a structural adjustment programme. It is in discussions with the institution about specific Covid-19 packages.



Those who hid from the world over the long weekend emerged to find on Tuesday that provisional data shows that South Africa is on a “unique trajectory”, according to the chair of South Africa’s Covid-19 Ministerial Advisory Committee, Professor Salim Abdool Karim.

What he means by this is that the country seems to have limited community transmission, for now, because of early and proactive government interventions.

However, as Estelle Ellis writes, he warned that an exponential increase in infections is probably inescapable but that the lockdown’s effect of slowing the spread has “bought us time” to prepare the healthcare system, gear up testing and move towards a vaccine and treatments.

To read Ferial Haffajee’s analysis of the three-hour-long presentation in the context of the government’s response to the outbreak, click here. It also contains the presentation slides.



Meanwhile, 30 provincial social movements in the drought-stricken Eastern Cape have written to Premier Oscar Mabuyane to ask after the water tanks promised to villages which have still not rolled in. The situation of the OR Tambo district paints the picture clearly:

“The situation in the province is very dire. For instance, in the OR Tambo district barely 6% of homes have piped water while less than one-tenth of households have flush toilets. The district is home to almost one and a half million people – two-thirds of whom are under the age of 25. Yet most young people are unemployed. Only 18% of residents have finished school. Close to 60% of households are headed by women, many of whom are pensioners.”

Estelle Ellis spoke to activists in various villages about the struggles they face to campaign for water so that other residents can wash their hands and water their crops.

In the Western Cape, it has come to light that 11 police officers have been arrested in connection with allegedly faking a complaint of a triggered burglar alarm and housebreaking at a liquor store in Bonnievale on Monday 13 March. Vincent Cruywagen spoke to experts about what the lockdown means for networks of illegally traded alcohol and drugs. DM


"Information pertaining to Covid-19, vaccines, how to control the spread of the virus and potential treatments is ever-changing. Under the South African Disaster Management Act Regulation 11(5)(c) it is prohibited to publish information through any medium with the intention to deceive people on government measures to address COVID-19. We are therefore disabling the comment section on this article in order to protect both the commenting member and ourselves from potential liability. Should you have additional information that you think we should know, please email [email protected]"

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