APRIL 2020 FORBES AFRICA| 17FORBESAFRICA
FOCUS• CORONAVIRUSFORBESAFRICA.COMPhoto via Getty Images
ForSouthAfrica,GDP
growthis nowlikelyto
comeoutat 0.1percent
thisyear,dueto the
impactof Covid-19 on
global growth.S
OUTHAFRICA’SRANDCURRENCYREACHEDITS
lowestinmorethanfouryearswhilethecomposite
JohannesburgStockExchange(JSE)AllShareIndex
recordeditsworstdropin 23 yearsaftertheWorld
HealthOrganizationdeclaredtheoutbreaka globalpandemic,
wipingbillionsofdollarsfromthevalueofcompanieslistedon
Africa’smostliquidandbiggeststockexchange.
Andit’sbeenmostlydownhilleversince.Businessconfidence
inthefirstquarterof 2020 felltoa 21-yearlow,theBureaufor
EconomicResearchreported,citingtheprospectofsloweror
nogrowthatallinaneconomythatwasalreadyinrecessionin
thelastsixmonthsof2019.Atthetimeofwriting,therewere
116 confirmedcasesandnodeaths,accordingtotheNational
InstituteforCommunicableDiseasesinSouthAfrica.
“I am worried,’’ said Ian Kirk,Chief Executive Officer of
Sanlam, Africa’s biggest insurance business
which operates in 44 countries, toFORBES
AFRICA. “To the extentthat world growth
startsimpactingonourgrowthnegatively,that
does concern me. I think it’s a two-quarter
thingbutnooneknowsatthisstage.’’
Most South African economists, the
government andthe International Monetary
Fund (IMF) had forecast growth in Africa’s
secondlargesteconomytocomeinbelowone
percentthisyearasthecountrystruggleswith
depressedinvestmentduetopowershortages
andpolicyuncertaintyoverthegovernment’s
landreformprogram.
ManywillnowlikelycutthoseforecastsaftertheIMFsaid
thepandemicmightreduceglobalgrowthbyalmosta percent,
dampeningdemandforthecommoditiesthatSouthAfricaand
mostAfricancountriesrequiretogrow.
Thefundsaysit standsreadytoofferfinancialsupportas
countriesdivertresourcestotackletheoutbreak,likeit did
duringtheEbolacrisisinWestAfricaandinMozambiqueafter
CycloneIdaidevastatedlargepartsofthecountry.
Thereisasmuchas$40billionearmarkedtoassistemerging
marketcountries,accordingtoitsManagingDirectorKristalina
Georgieva.
“ForSouthAfrica,GDPgrowthisnowlikelytocomeoutat
0.1percentthisyear,duetotheimpactofCovid-19onglobal
growthandhencedemandforSouthAfrica’sexportsofgoods
andservices,’’AnnabelBishop,ChiefEconomistatInvestecsaid
ina statement.Growthwillalsobehurtby“thenegativeimpact
ofloadsheddingwhichisprovingtobemoreseverethanEskom
initiallyindicated.’’
Acrossthecontinent,thenumberofcasesofCovid-19isgoing
up.BythethirdweekofMarch,theWorldHealthOrganization
(WHO) reported 33 African countries had 633 cases ofcoronavirusinfectionswith 17 deaths,stilloneofthelowest
talliesona continentbasisintheworldbutworryingfora region
withoutadequatehealthfacilitiesandexpertise.
Theorganizationsaysit’sscalingupthepreparednessof
Africancountriesandstrengtheningtheiremergencyhealth
regulations.
First-timeinfectionswerereportedintheGambia,Zambia
andMauritius.
TheAfricanUnioninFebruaryheldanemergencymeeting
ofitshealthministerstomapouta strategytostrengthenthe
continent’spreparednesstotackletheoutbreak,developa
commonapproachonstudentsandcitizensseekingtoreturn
fromChinaandshareknowledgeonexperimentalvaccines,
drugsandclinicaltrialscurrentlybeingundertaken.
In Nigeria, thecontinent’slargesteconomy,thetwincrisesof
loweroilpricesandslowinggrowthfrom
thecoronavirushascomeata vulnerable
time,accordingtoLagos-basedChapelHill
DenhamResearch.
Oilpriceswhichhavealmosthalvedthis
yearcomeata timewhenthecountryis
stilllargelydependentonthecommodity
andgasforexportearningsandthefunding
ofitscurrentaccount.
Nigeria’scurrentaccountremains
anothersourceofpressurewithforeigners,
thelargestinvestorsinthecentralbank’s
treasurybills,translatingtoabout35%of
externalreserves.
“Thishasfar-reachingconsequencesonthetermsoftrade
andfiscalbalanceforenergyexporterssuchasNigeria,’’ the
companysaysina notetoclients.
Thecountryhadtwocasesandnodeaths.
AsSanlam’sKirknoted,it’sinSouthAfrica’scapitalmarkets
thatthebiggestimpactoftheoutbreakhasbeenfelt.Already,
analystsarespeakingofa hitfromtwoblackswans:theimpact
ofthevirusonoverallgrowthandthehitfromloweroilprices
oncompaniessuchasSasol,supplierofasmuchas40%ofSouth
Africanfuel.
Sasolhasseenitssharepricemorethanhalveinsidea week.
SouthAfricanequities,alreadyreflectinga weakeconomy
invaluationsseenbymostanalystsasshowingdeepvalue,are
approaching“absurd’’levels,accordingtoPeterArmitage,CEO
ofAnchorCapital.
“TheSouthAfricanmarkethascrashedafteralreadyhaving
effectivelycrashed,’’Armitagesaysina notetoclients.“Valuation
levelsarebecomingabsurdandbargainsaboundontheJSE.’’
Butthoseopportunitieswillremainonpaperfora whileas
theworldgrappleswiththeviruswithmanyAfrican countries
most likely to see a peak in new infections.