COVID-19 has exacerbated pre-existing inequalities in South Africa… how has the country performed in response to the crisis? How will it recover?

One year on, how has the South African Government performed during the COVID-19 crisis? The Wheeler Institute for Business and Development invited Professor Nick Binedell – Professor and Former Dean of the Gordon Institute of Business Science, University of Pretoria – to share his views on the government’s response to the COVID-19 crisis, and to discuss barriers to equality and the role of education more generally. Binedell joined the Wheeler Institute COVID-19 series in May 2020.

COVID-19 intensified already-existing inequalities and amplified poverty, but increasing engagement between public and private sector offers a glimmer of hope

COVID-19 brought many contradictions and weaknesses to the fore in major emerging markets – across Brazil, India and South Africa, we have watched states grapple with the problems of lives vs. livelihoods and how best to manage large scale trade-offs of public health and the economy. South Africa saw the erosion of 1 million formal jobs during the pandemic, with many companies and small businesses forced to close their doors. Binedell states that in comparison to other major emerging markets, South Africa had a sophisticated lockdown approach, planned jointly by the state and private sector – a true partnership between government and business for the first time in many years. However, where South Africa succeeded on design, it failed in execution and implementation. Despite a hard and stringent lockdown, guided by medical experts and practitioners, South Africa is a largely non-compliant society. Mask-wearing was limited, and the spread of the disease rampant. Moreover, Binedell states the vaccination rollout program was poorly administrated, contributing to the depth of the third wave. This, combined with disastrous economic impact of shutdowns, has meant that poverty is resurfacing at a huge scale. Binedell spoke of the emergency food crisis work he was involved in, with business and NGOs working together to ~70K people over 3 months. He states that South African society is at its core resilient – it may not be well organized, but if you push it up against the wall, it will rebound.

South Africa is a very open economy, well-functioning and attractive to foreign investment, and the fact money has begun to flow into the market is giving the illusion of an economic turnaround – however, it is estimated that GDP will not return to its 2016 levels until 2023. Binedell highlighted the importance of growing domestic investment in encouraging an economic return: when the growth rate is less than that of the population growth rate (1.8% pa), decline in per capita income occurs faster. He opines that South Africa has not modernized fast enough, with weak infrastructure and network connectivity holding the country back in this fourth industrial revolution. However, the COVID-19 pandemic has opened a new era for government in South Africa, acknowledging errors and addressing policy in a more open-minded way than it has previously – creating new institutions and pathways to allow the private and public sector to work together on vaccine strategy, managing the economy and generating domestic investment. This will create the structural change necessary to support the conservative social push already in place. Binedell states that South Africans are politically very loyal, and public leaders should take advantage of that broad good will to improve livelihoods, stakes and create better opportunity for subsequent generations.

Barriers to equality remain as a relic of colonization and better access to high-quality education is the key to reformation in South Africa

South Africa, as a settler colony oppressed by foreign powers for many centuries, developed deep-rooted structural inequalities that restricted the system for many. Black South Africans were oppressed and prevented from being capitalists and participating fully in the economy. Colonization brings a multitude of contradictions: the very legal system that neglected and oppressed Black South Africans also grew to be a robust judicial system with a strong rule of law – its constitutional court recently charged the ex-President with corruption – signaling the resoluteness of some institutions. How can this country, with high-levels of corruption, a strong criminal element and gangs, an illegal, underground economy – all strengthened during COVID – built upon oppression, find their footing?

There has been a huge amount of change in South Africa in a very short time, and contradictions are embedded in all of this. Black Economic Empowerment is a legislated set of conditions and all companies are scored on their level of transformation to these policies, paving the way for a growing Black middle class and Black elites. However, this raises a contradiction now in that many young White South Africans are precluded from entering jobs and are emigrating in high levels – we see these policies working in complex sociological ways. Binedell opines that South Africa absolutely needed Black Economic Empowerment and although White leaders were prepared to make concessions, the White public were reluctant to give up their privilege, assets, status and salaries. By implementing structural programs and legislation to increase access to education, South Africa now has a large Black middle class, and more importantly, a new asset in the next generation of engineers, doctors, accountants and lawyers. Binedell states that education is the key to continue the transformation: but the public system is getting worse, not better and this is the silent killer of South Africa’s prospects. Today, 70% of schools have no internet access – meaning inequality is embedded and exacerbated in the difference between private and public school systems. Quoting Abraham Lincoln, Binedell says “if we face destruction, then we are its authors.” South Africa has had 27 years of freedom and effected some real change in that time, but more remains to be done – now with the added complication of corruption.

However, South Africa has managed to progress to become the most advanced economy on the continent by far. Its economy is 40x that of Kenya, has a higher GDP per capita than Nigeria and is home to many domestic major players in manufacturing and physical infrastructure. The foundations are in place socially to support change, but public policy must follow. In a post-COVID world, there will be an increase in informal and formal crime to battle increasing levels of poverty, but Binedell believes that trust in government is slowly returning and there is a road to recovery visible ahead.

Nick Binedell is Professor and Former Dean of the Gordon Institute of Business Science, a Business School situated in Illovo, Johannesburg and established in January 2000, by the University of Pretoria.

Victoria Henderson (MBA 2021) has three years’ experience in management consulting at Bain & Company, and a background in Law and Politics. She is an intern for the Wheeler Institute, contributing to the creation of content that amplifies the role of business in improving lives.

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