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The impact of Covid-19 on the economy and businesses | AGORA AFRICA

By:Nobuhle Makwakwa

Posted on: July 2020

Since the first detected case of COVID19 in Wuhan China, in December 2019, the world at large has been grappling to contain the spread of the deadly virus. Many countries, like South Africa, have implemented strict social distancing and hygiene protocols in an attempt to curb it’s spread and limit the number of people that are at risk of contracting the virus. Although the measures have been put in place to try and flatter the curve (surge of infections), it is anticipated that COVID19 will stick around longer than what is desirable.

Scientists from the University of Minnesota have predicted that without a vaccine/cure, it is anticipated that COVID19 will not end until at least 60% of the population has become immune to the virus and that is likely to take between 18-24 months. However, WHO warns that COVID19 may never go away, it may become an endemic and we would live with it as we do HIV, Measles, Diabetes, etc. It is evident that we are all to adopt a new normal in the way we conduct ourselves daily and such changes are also to be assumed by all industries.

The impact of Covid-19 on the economy and businesses | AGORA AFRICA
The impact of Covid-19 on the economy and businesses | AGORA AFRICA

In response to this global disaster, the South African Government has introduced a national lockdown in stages (5-1) governed by the Disaster Management Act, 2002 (Act No. 57 of 2002). The national lockdown has resulted in:

  • Restriction on the movement of people and goods
  • Companies temporarily closing business for a period of 2-3 month (both public and private sector)
  • Drastic decrease in world trade (stage 5-4 lock down: complete shutdown of imports and exports trades)
  • Supply-chain disruption
  • High decrease in economic activities

On a report, “COVID -19: Nine in ten business report reduced turnover” Stats SA has stated that nine in ten (90%) companies/businesses in various sectors are to expect a lower turnover than normal.

The construction industry has reported 96% of companies’ turnovers to be below normal range.

The pandemic has turned the world upside down in a matter of months. Nobody could have forecasted that the year 2020 would be filled with so much turmoil and devastation.

The global economy has plunged over the past months and the impacts are felt widely across all industries. The construction industry has previously proven to be sensitive to the state of the economy and as a result the industry has become intrinsically volatile. The surge of this pandemic and the uncertainty around it has crippled an already unstable industry.

Most construction activities have been considered non-essential at stages 5- 4 of the national lockdown in South Africa which has resulted in companies halting productivity leaving many employees out of work and with limited means to fend for their families.

This now topsy-turvy world has inevitably had a noticeable effect on the psychological state of individuals living in this time. Suntosh Pillay, a clinical psychologist working in the Public sector of KwaZulu-Natal is of the view that the COVID19 virus has caused an “emotional tsunami”.

There is fear not only around contracting the virus, but there is also fear around job security. Construction and real estate have not been faring well over the past years and this has been evident in the number of retrenched workers in the fields. A decline in the economy coupled with the crippling effects of COVID19 is likely to impact workers emotional and psychological wellbeing negatively and this is cause for concern as it is common knowledge that a happy worker is a productive worker. (In countering the effects of COVID 19 on the industry, employers should not only find ways to save themselves financially, but also provide emotional and psychological support to employees).


The impact of Covid-19 on the economy and businesses | AGORA AFRICA

In this uncertain time companies must be strategic in the way business is carried out with the “new normal” life. During the lockdown stage 5-4 most individuals worked from home, some companies have retrenched their staff and most companies have cut salaries to safeguard their staff. As the economy is gradually opening for activities companies need to adapt and transition to a different approach in the strategy of working, this involves the following:

  • An article by Nick De Mey and Philippe De Ridder, states that companies need to be Innovative. They need to investigate new business opportunities, develop new growth strategies, and ensure to have a loyal and consistent growth
  • Engage with clients and consumers on strategies to maintain
  • And most importantly conforming to the COVID-19 regulations – Social distancing in offices and limited contact with people, creating an office-in schedule for the staff to have less than 50 people in office at a time, conducting COVID-19 training for all employees and ensuring the staff is has the necessary equipment (masks, sanitizers, face fields, )


According to an article released by John G. McConville, Operations Director at Compass International Inc, the spread of COVID19 is likely to have just as many positive impacts as it does negative. The construction industry is likely to pay a premium for goods and services required to complete their projects due to COVID19. The prices of material, labour and building costs are likely to increase in light of contact and a hygiene regulations as more man-hours will be required to complete tasks whilst also making provision for new health and safety features that weren’t required prior to the arrival of COVID19.

However, there is some positivity in that we can look forward to new infrastructure projects that many governments around the world are expected to initiate in order to stimulate economies and reduce unemployment rates and we can further anticipate savings on office rentals and general staff and support staff can continue to work from home. Some industries such as the hygiene and sanitary, agriculture and food supply have been experiencing a rise in demand since the arrival of COVID-19. The pharmaceutical industry to also expect a rise in demand once a vaccine has been developed. In conclusion, COVID-19 has been a life-changing experience for everyone globally, it has thought us to be prioritize hygiene, be innovative and prove to us how one can easily adapt to change.