Recent transactional data shows how consumer spending took a hard knock from the Covid-19 third wave and stricter lockdown, as well as the unrest from the rioting and looting that occurred during the month of July. These two events have dented the country’s economic recovery in a short time.
BankservAfrica’s Card and Point-of-Sale (POS) transactional data measured consumer spending from the lockdown levels during the June to July 2021 period, as well as the riots in KwaZulu-Natal and Gauteng during July 2021. It also compared the spend over this period against the 2020 and 2019 figures.
Transactions during the week of looting
During the main week of looting from 11 July 2021, the volume of card and ATM cash withdrawals declined from about 4.5 million transactions per day to about 4.3 million. This was however slightly alleviated by the panic buying in the two affected provinces.
Due to the SASSA grant payment dates which are factored into the transactional data and the looting, which started in earnest from 09 July 2021, the average number of transactions equalled 3.35 million for the 15 days to 24 July 2021 compared to the 3.69 million transactions for the same 15 days to 24 June 2021.
The impact was therefore a 9% drop on the comparable fifteen days in July 2021. This indicates that the riots and looting had at least a two-week impact on consumer spending on POS and ATM transactions.
Transactions during the May – June 2021 lockdown levels
From 31 May 2021 when alert level 2 was introduced due to the sharp rise in Covid-19 infections, the number of transactions dropped. Transactions declined when alert level 3 was declared on 15 June 2021 and spiralled even further when alert level 4 was announced on 27 June 2021.
It appears South Africans were taking a cautionary approach during the third wave. Spend was also affected by the restrictions that were placed such as the prohibition of alcohol sales and for restaurants that were unable to operate.
“The consumer spending impact from the lockdown level 4 and the riots is quite substantial, and one can expect this to show a negative impact on June 2021 and particularly July 2021 economic data,” noted a leading economist.
The estimated 9% transaction decline over 15 days could be equal to about a 5% decline for July for consumption expenditure.
The change in card and cash spending since 2020
Interestingly the 2020 data also shows a decline in the value of transactions from a very strong year-on-year growth in April and May (due to the very low base because of lockdown levels 5 and 4 during the same 2020 period).
Since adjusted level 4 was announced on 27 June 2021 transactions declined. South Africans have spent 3.1% less in real terms. Spending dipped again on 8 July 2021.
The change in consumer spending on card and cash since 2019
South African consumers have spent around 5.2% less since the adjusted alert levels 3 and 4 came into force in June 2021 when compared to 2019,” says Schüssler. The most recent change was -2.6%.
In the days following former South African President Jacob Zuma’s imprisonment when disruptions began and led to the looting and rioting, spending remained about 5% below the same period two years ago. There is a slow recovery now.