The ongoing local protests and widespread looting have taken the country by storm. Although many believed the protests were about the unfair conviction of the former president “Jacob Zuma”, it has now become evident that the protests are somewhat a reflection of the deeply rooted socio-economic issues facing local communities daily.
Prior to Covid19, the South African economy was already in struggling, characterised by high unemployment, extreme poverty and uninspiring growth. Much of this can be attributed to poor leadership and bad governance. The fact of the matter is that “corruption” in all its forms, deprives vulnerable people of income, and prevents people from fulfilling their political, civil, social, cultural and economic rights. When vulnerable people are fed up, they resort to the streets they know best. While the Jacob Zuma saga gave local citizens a reason to protest, the subsequent protests and weak police response created a platform for criminals to loot, given that the benefit of looting outweighs the probability and penalty of being caught.
The recent acts of criminality will, however, have huge economic implications in the short and long term. Without reasonable doubt, the looting will increase unemployment further and leave the majority of the population in extreme poverty and inequality, something the government has been battling for the past 25 years. A conducive business environment and sound economic policy are what drives business confidence and foreign direct investment.
With the recent looting of businesses and damage to property, business and investor confidence will be heavily impacted. Investors might consider moving their businesses and investments abroad amid fears of low returns and social unrest in South Africa. Taxpayers also, are to bear the bulk of the burden given that the government finances most of its day-to-day operations through taxpayers’ money and borrowing.
This won’t bode well, not only for the current generation but also for future generations. The majority of citizens (the working class in particular) have been retrenched due to the Covid19 pandemic and subsequent restrictions to economic activity. Thus, when the government finds tax instruments less effective in raising revenue, they will opt for debt financing and this burden will be borne by future generations. In the short run, consumers can expect an increase in the prices of goods and services given the shortages in the food supply as a result of the looting and loss in working hours. In overall, the recent acts of criminality as well as the slow paced vaccine rollout plan will delay economic recovery and prosperity.
