The EFF’s nationwide protests did not have an immediate impact on the economy, but the economic impact of this could possibly be visible in the next few months.
The Rand traded steadily on Monday while it was another good day on the JSE.
According to Riaan Grobler, financial advisor at Everest Wealth, it is positive that there was pro-active action by the government, the private sector and civil society to try to maintain law and order and that the protests ultimately did not lead to large-scale disruption, incidents of public violence or looting.
“South Africa’s economy cannot afford a repeat of the riots of July 2021, with the impact still being felt. The major impact of protests and strikes is usually only felt a few months later with the general consumer who ultimately has to bear the brunt of it.”
Major businesses had contingency plans in place, including increased private security, in anticipation of possible disruption during Monday’s protests, while several businesses decided to close their doors for the day instead for fear of looting, meaning there were people who could not go to work. Members of the South African National Defence Force were deployed at a cost of more than R166 million.
“The consumer is going to pay for this at the end of the day. The deployment of the defence force affects the taxpayer’s pocket and puts pressure on the state coffers, while companies’ increased spending on private security will also have to be factored in somewhere where the consumer will feel it – less profits mean less dividends.”
Grobler believes that ordinary people are also getting fed up with the disruption that comes with protests and strikes.
“Fear of what might have happened during the protests resulted in many people not continuing with their day as usual. Some people may have decided not to be on the road for fear that their cars could be damaged.
“Others may have preferred to stay at home to avoid possible public violence. The country cannot afford to lose a single day of productivity. Businesses that had to close and people who didn’t go to work have an economic impact that will ultimately affect the consumer again, with for example low or no increases, let alone a bonus.”
Protests and strikes may also increase in the run-up to next year’s election and this does not bode well for the economy as it may result in unemployment rising further, interest rates rising, the Rand weakening and the raising of taxes due to a loss of income for the state.