South Africa Struggling To Overcome the Impact of Coronavirus
African response to the novel coronavirus pandemic that started in early January of 2020 has been a very mixed basket. Some countries like Tanzania and Burundi literally ignored the whole problem and did not enact any of the necessary health and safety regulations that would prevent further spread of the virus. Nigeria, which is one of the largest countries, did recognize the danger but lagged behind on testings and contact tracing policies. However, there are some that decided to follow up on every regulation and bring in a necessary quarantine period for the citizens to try and outlast the virus spread. Countries like South Africa were on the frontiers of proper regulations, although a bit too much with tobacco and alcohol sales ending up restricted as well. The nation started testing the citizens in mass and tried to contain the issue before it spread further. The acting president of South Africa, Cyril Ramaphosa, became quite popular with the people with these policies and rallied huge support from the population. This even manifested itself into health minister, M.D. Zweli Mkhize, travelling around the country informing people about the president’s decision.
Problems with Lockdown
The problem arose due to the fact that the South African economy is not strong enough to support the strict 3 week lockdown period. The quarantine was made effective to curb the spread of the virus. The army was brought in to help the police keep the population in check. Only groceries, pharmacies, filling stations, and banks were allowed to open. Educational institutions were closed down almost instantly. Otherwise, Zweli Mkhize has warned the population that if the infection escapes into the city as much as 70% of the population could become infected. The inner movement through big cities like Johannesburg is extremely hard to regulate though since a lot of people are living in very close proximity to each other in cramped shacks that do not even have enough comfort to enforce at least basic hygiene. However, the national government’s lockdown was so strict without the ability to send out meaningful stimulus packages to households that it in conjunction with the ever-increasing unemployment rate pushed a big number of people to literal hunger. The government was forced to ease the restrictions and just go with the faith in the people of South Africa to abide by the social distancing laws.
Breath of Fresh Finances
A number of people started searching for an alternative income source. The tourism industry was shut down, there were no flights, no hotels, restaurants, schools, no gold mines, trains, nothing. Those who were fortunate enough to have some money on the side started researching trading as the means to try and stay afloat. A huge number of people utilized the available resources and learned much about the foreign exchange market (Forex, FX) through online sources. Apart from this, South Africa boasts one of the most regulated and well off FX industries due to the hard work of the Financial Sector Conduct Authority (FSCA), which is the successor to the Financial Services Board (FSB), which managed to root out a number of scam companies from its market making it possible to trade in a much safer environment for people who had the necessary hardware (which may be anything from a simple smartphone, tablet, laptop or even PC) and an internet connection. One of the most useful tools that came out from this growth in effectiveness and size of government interference in the financial industry was the huge number of FX related websites trying to navigate beginners through dangerous waters of a young market. Most websites would try to narrow down the perspective to just news provision, while others would directly deal with the companies operating in the country. Based on the information gathered on one such platform the Top Forex Brokers website the growth in FX trading popularity gave a boost to the economy and South Africa now boasts as much as $20,37 billion in daily traded volume on forex across all instruments plus all the revenue that entrepreneurs managed to generate through operating these information sources.
The FX trading has become so prevalent that the Bank of International Settlements (BIS) now ranks the South African rand as the 18th most commonly traded currency in the world. This may not seem like much but it’s quite an achievement considering there are more than 100 different official currencies across the world.
South Africa Now
Things were going fine and dandy for the duration of the quarantine. However, once it was lifted – fast forward five months – and the country quickly became the world’s fifth-biggest outbreak hotspot. As much as 640,000 citizens are infected with almost 16,000 people who succumbed to the illness. The dysfunctional politics and weak economy became large contributors to the widespread outbreak. The government just did not have enough funds to finance the people of South Africa to stay at home. Although the number of infected is huge the most pessimistic forecast was estimating as many as 1.2 million infected with over 50,000 deaths. This means that for now, the situation could have been much worse. As a comparison, Brazil has over 3.3 million cases and 108,000 deaths. However, the efforts from knowledgable people to study and overcome the issues by finding additional stable income through trading currency pairs on FX has paid off. Rand trading has increased as much as 182% over the last year since the coronavirus started rocking the world.
The coronavirus hit the economy in a very damaging way that will probably take a couple of decades to recover from. There are reports that the South African economy shrank by almost a third of what it used to be before the pandemic. The annual Gross Domestic Product (GDP) is expected to collapse by almost 33% during the three months period in just one financial quarter.