Fitch and S&P’s warning on SA’s slow pace of Covid-19 vaccinations

Ratings agencies Fitch and S&P Global have warned about the slow pace of South Africa’s Covid-19 vaccination programme.

Both agencies kept the country’s long-term sovereign credit ratings at BB- on Friday, which is three notches below investment grade. However, both also flagged the comparatively slow rate of vaccinations as a constraint or risk to medium-term economic growth.

Read: S&P and Fitch affirm SA’s sovereign credit rating and outlooks

“Infection numbers have started rising again and the pandemic will continue to pose risks well into 2022, as [the] vaccine rollout is proceeding slowly,” Fitch says in its latest rating report.

It points out that South Africa has effectively administered around 0.9 doses per 100 of the population as at mid-May.

In Health Minister Zweli Mkhize’s daily Covid-19 update on Tuesday night, he noted that South Africa had administered 651 628 Covid-19 vaccines.

#COVID19 Statistics in SA as at 24 May.

Use the COVID Alert SA app to protect yourself, your loved ones and your community. Start using this privacy preserving app today. Add your phone to the fight! Download the Covid Alert SA app now! https://t.co/8YKEqaiiRF pic.twitter.com/4oDipe0bmV

— Dr Zweli Mkhize (@DrZweliMkhize) May 24, 2021

Mkhize, who has also been warning recently of the country hitting a third wave of the pandemic, noted that there are currently 40 724 active cases of Covid-19 in the country.

While Fitch has recognised that the South African government has secured enough doses to inoculate the adult population, it highlights that most of this “will arrive only in the second half of 2021”.

“We assume that the economic fall-out of any new waves will be more limited than last year, as policy-makers have containment measures [that] will be more targeted and the economy has adapted, but it could still weigh on public finances,” Fitch adds.

S&P meanwhile highlights the slow vaccine rollout as a constraint on the country’s medium-term economic growth, together with structural constraints and the weak pace of economic reforms.

“South Africa’s vaccine rollout program has been slow, primarily reaching health sector workers so far,” says S&P.

“The rollout has been complicated by negotiations with manufacturers and questions about the efficacy of some vaccines for the predominant variant of Covid-19 in South Africa,” it adds.

“Agreements have now been reached with Johnson & Johnson and Pfizer that will aim to inoculate at least 40 million people [about two thirds of the total population] by early 2022. Phase 1, which focused on inoculating health sector workers, is near completion while Phase 2 began rollout from May 17, targeting people above 60 and those with comorbidities,” S&P notes.

In its reaction to Fitch and S&P’s ratings decision late on Friday, National Treasury also addressed the vaccination issue.

“South Africa plans to accelerate its vaccination rollout programme with phase two having commenced on 17 May 2021, with the aim of inoculating five million citizens aged over 60 by the end of June 2021,” Treasury said in a statement.

“Successful vaccination of the population will help prevent the spread of the pandemic as it poses downside risks to the economic outlook,” it added.

Treasury also reiterated government calls for “all members of society to adhere to all the necessary health and safety protocols in place” to help minimise the rise in Covid-19 infections.