ATTACK OF COVID-19 ON ESWATINI’S ECONOMY

(Guest Writer)
B.A. Economics & Mathematics

The world remains in a state of fear and turmoil as the COVID-19 virus continues to ravage our lives. As the official death toll from the virus exceeded 200 000 this past weekend, economists are attempting to measure the cost this pandemic will have on the economies of individual countries, as well as the global economy.

On March 27, Eswatini joined over 100 other countries in instituting a national lockdown. Currently one-third of the world’s population is forced to endure strict, and oftentimes tyrannical, limitations on their personal freedoms. The economic shock has been devastating. As non-essential industries have been forced to shut down, millions of working-class people have been laid off or furloughed

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Cautious

 Previously well-off individuals have found themselves unemployed and unable to find any work in a shutdown economy. In the USA, over 26 million people are unemployed. Like every emaSwati, these individuals have families to support and bills to pay.
While Eswatini has remained rather sheltered from the pandemic, this winter season could be disastrous. Scientists predict that the virus is more lethal and contagious in colder weather; therefore, as winter approaches, Southern Africa needs to be extra cautious about the potential for a second, and more vicious, wave of the virus.

While COVID-19 does not discriminate in who it infects, poorer populations are at a higher risk of infection and fatality.
Low-income populations are usually less healthy than wealthier populations, and are less capable of receiving necessary healthcare. In Eswatini, 70 per cent of the population lives beneath the poverty line. We have the highest prevalence of HIV among adults in the world, and our healthcare system is inadequate during the best of times. These conditions render Eswatini as the perfect breeding ground for the virus to spread.While the Ministry of Health attempts to stem the rate of infection, if Eswatini does experience an outbreak comparable to some of the worst hit countries, how will our beloved Kingdom survive?
As the number of cases escalates and medical facilities become increasingly overwhelmed, the cost of treating patients will swell. If developed countries with far superior medical infrastructure were incapable of handling the crisis, how will Eswatini be able to manage it?

Deteriorate

Will hospitals be forced to turn away the sick and dying? Will those with illnesses like diabetes, HIV, and cancer continue receiving treatment?
The health of any population is critical to its economy. If people are sick they cannot work and they cannot support their family. Developed nations can afford multi trillion-dollar economic relief packages, Eswatini does not have this luxury.

E90 million relief fund
Government has stated that it will provide economic relief of up to E90 million to small and medium businesses that have been hurt by the lockdown. Although a decent starting point, this is insufficient to offset all of the economic costs that have been incurred. Within the one month that the lockdown has been in place, several businesses have already been forced to shut down permanently. With the lockdown expected to remain in place for at least another month, we can expect more businesses to follow suit.Thousands of previously employed emaSwati could find themselves unemployed and, with no income for the foreseeable future, living conditions will deteriorate rapidly.

Economic disaster
The global economy is expected to shrink by three per cent this year while global GDP for 2020 and 2021 is set to fall by over 9 trillion Dollars. South Africa’s economy, which Eswatini heavily relies on, is expected to shrink by six per cent this year. These numbers are terrifying but, with many countries extending their lockdowns to June, they could only be the beginning of a global economic disaster.
Reductions
Small business owners and employees will bear the brunt of the economic burden; however, if global trade does not pick up, Eswatini’s major industry - agriculture– will also begin to suffer. With less global demand, Eswatini’s exports will decrease and the agricultural sector will be forced to downsize leaving thousands more unemployed. Even for those employees who do keep their jobs, there will be no chance for wage increases or bonuses.

Lilangeni weakens
With the Lilangeni expected to weaken against other major currencies, the prices of food, medication, and other essential items will greatly increase. As the United Nations and other governments and non-government organisations become increasingly overwhelmed by the situation, Eswatini could face a drastic decline in the amount of foreign aid it receives. This aid is essential to our economy and any reductions will be detrimental. It is my hope that all of these predictions prove false; however, the situation is bleak and appears to only be worsening. Our economy is under siege from this virus and, with so much uncertainty, only time will reveal the true cost of the pandemic.

Ridwaan Ismail holds a B.A. Economics & Mathematics, Lake Forest College IL, USA.

(NB: This is a weekly feature that will be published every Tuesday. For any comments send to ismailridwaan7@gmail.com)

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