Don’t underestimate the need for scenario planning after the virus passes

The impact that Covid-19 will have on global economies is astronomical and will have far-reaching consequences for many countries.

What this crisis is teaching us, among other things, is that there needs to be a fundamental shift in the way we do business, and it highlights the need for scenario planning.

In the first series of the Gibs Flash Forum, Colin Coleman, senior fellow and lecturer at Yale’s Jackson Institute for Global Affairs in the US, told the dean of Gibs, Professor Nicola Kleyn, that the effects of this health crisis will change the way people think about society and the interdependencies on different countries.

Below are some salient points from the conversation:

Risk mitigation

A strategic approach to risk mitigation will look at changing the dependencies on different countries and the competitiveness of the products they produce, as well as the cross-country relationships they will need to form.

Growth

Africa’s growth rate will continue to decline and the need to increase the growth rate above its average of 5% over the past 20 years is imperative. This will close the foreseeable gap between GDP and its population share.

Fiscal stimulus

The rand will take a beating. Equity markets and financial institutions will need to provide fiscal stimulus in the range of 4% to 5% of GDP, even though fiscal space is limited.

Government will need to make a fiscal intervention to defend the currency, save jobs, give liquidity to businesses and increase social grant spending.

• City Press is a media partner of the Gibs Flash Forum

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