DAVID MUNRO: Quick and thorough Covid-19 vaccination offers SA’s best economic chance
Vaccinations can boost economic growth by 2.5% over a five-year period due to improved life expectancy
Fully vaccinating the majority of adult South Africans against Covid-19 would lift business and consumer confidence, leading to much-needed job creation, and ultimately boosting economic growth.
The pandemic has had a devastating effect on SA’s economy, which contracted 7% and saw 2.27-million jobs lost in 2020. As the country is in the midst of a brutal third wave, the economic effects we will experience in 2021 are not yet known.
The speed and extent of a national vaccine rollout is critical to stimulating economic recovery — and saving lives. Globally, countries that have achieved large-scale vaccination of their populations are returning to normal and seeing economic growth pick up.
Vaccinating 70% of adult South Africans would cost about R13.5bn, while boosting the economy by up to 11 times that number, according to research by PwC and Business for SA. Research in the Journal of Market Access and Health Policy on the economic effect of vaccinations over the past 80 years has found that eliminating infectious diseases has a positive economic effect, including improved productivity, life expectancy and the overall welfare of families. In fact, vaccinations can boost economic growth by 2.5% over a five-year period due to improved life expectancy.
Besides ravaging many businesses, the Covid-19 lockdowns have created high levels of uncertainty, which undermines business and consumer confidence. Amid such uncertainty, fixed investment spending, especially on machinery and equipment, transport equipment or technology upgrades, has been put on hold. This has effectively undermined the development of the economy, including the willingness to hire back the people who lost their jobs during the initial lockdown phase.
If SA is able to fully vaccinate the majority of the adult population the country would be in a position to lift almost all Covid-19 restrictions. This on its own would lift business confidence, prompting the private sector to consider spending additional funds on key upgrades to machinery and equipment.
Other economic benefits of vaccination include an increase in tax revenue as the economy reopens on a sustainable basis, an improved balance of resources in the provision of medical care as fewer resources are devoted to fighting Covid-19, and more consistency in the provision of education, especially at a school level.
Most importantly, vaccinations save lives. Research in medical journal The Lancet found that every Covid-19 death prevented was the equivalent of 16.8 life-years saved.
Large economies including the US, UK and parts of Europe have made significant progress in distributing Covid-19 vaccines, leading to notable economic benefits. Service sectors such as leisure and hospitality, entertainment and travel have experienced increased activity.
In the US, the number of passengers using airports daily fell from about 2.3-million prior to the pandemic to a low of about 100,000 a day during the worst of the lockdown. The significant roll out of vaccines has resulted in the number of passengers a day increasing to about 2-million, with a noticeable surge in airline travel during the past three months as the number of people fully vaccinated approaches 50%. In April 2020, Americans spent less than half of what they would normally spend on eating out. Spending is now almost back to pre-pandemic levels.
In the UK, the services economy — including sporting events, concerts and conferences — is starting to gain some momentum. In addition, evidence from countries that have vaccinated a significant proportion of their adult populations is encouraging. In the US, 98%-99% of all recent Covid-19 deaths were among unvaccinated people. In the UK, Covid-19 surges are concentrated among the unvaccinated.
Put simply, vaccines work, and now is the time to get them to really work for SA. The pace of the country’s vaccination rollout has gained momentum over the past months — despite the closure of vaccine sites in KwaZulu-Natal due to the unrest. This has been helped by a strong partnership between government and business working together.
The private sector has increased vaccination capacity to about 110,000 doses a day, according to Business for SA (B4SA), an alliance of volunteers working with the SA government to combat the pandemic. By mid-September SA is expected to be administering up to 420,000 jabs a day, says B4SA.
While we acknowledge that mass vaccinations will not eliminate Covid-19, we hope that with the majority of the adult population vaccinated the disease will be seen as equivalent to a severe flu rather than something that requires significant social and economic interventions. We are delighted to be part of the solution to help curb the pandemic.
• Munro is Liberty Group CEO.
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