Using markets and donor support to mitigate the economic effects of coronavirus in African countries

ETA: a shortened version of this post has been published at African Arguments.

One truism about the coronavirus pandemic is that it is amplifying pre-existing vulnerabilities and inequalities.  This comes through particularly clearly in discussions about how African countries should respond to the pandemic. Rich countries have a range of options for containing the virus and mitigating its economic impacts but these solutions often require money or public health capacity which African countries lacked even before the pandemic.

This doesn’t mean that there is nothing to be done, however.  There’s been an outpouring of research on approaches to pandemic control and economic relief which are tailored to African contexts.  In particular, it may be possible to mitigate the economic impacts of the crisis through a mixture of targeted investments in public markets and public transport, and donor-funded cash transfer programs.  

How are rich countries responding to the pandemic?

To generalize a bit, rich countries have considered four different responses to the pandemic.  Most of them are clustering around approaches 3 or 4 at this point, which contain the virus and minimize economic disruption, but require lots of spending and strong public health capacity.

  1. Uncontrolled spread: Letting the pandemic spread mostly unchecked in order to rapidly build immunity in the population. This leads to many avoidable deaths, completely overwhelms the healthcare system, and causes a major economic crash, so that’s clearly a bad idea.  The UK briefly considered this before changing their tune.
  2. Lockdown without income replacement: putting the country on lockdown in order to avoid the spread of the virus, without compensating people for lost income.  This leads to higher rates of infection because many people must violate lockdown to continue working and feeding their families, and leads to an economic contraction as many others lose their jobs.  The US is only replacing a fraction of people’s lost incomes with a one-time $1200 check, so it’s a good example of this approach.
  3. Lockdown with income replacement: self-explanatory.  There are a variety of ways to replace lost incomes, from paying companies to keep their workers on board (like Denmark) to offering direct cash transfers to people who’ve lost their jobs (like Canada).  This approach slows the spread of the virus while preserving people’s ability to access the goods and services they need to stay healthy.  However, it’s also extremely expensive.
  4. Testing and containment: Testing enormous numbers of people in order to contain infections before they spread, and letting people who are not infected continue to work and travel as usual.  This is the Taiwan-Singapore approach, and it’s been successful at constraining the spread of the virus while minimizing economic disruption.  However, it relies on the existence of strong public health systems and access to hundreds of thousands of coronavirus tests.

What are the options for African countries?

Which of these approaches might be useful for African countries? Approach 1, uncontrolled spread, is inherently a bad idea, and many governments are already taking steps to avoid this.  South Africa and Uganda are on national lockdown already, Kenya is encouraging cashless transactions, Ghana is shutting down markets to fumigate them, and so forth.  We can also rule out approach 4, testing and containment, as most countries don’t have the extensive public health infrastructure needed to do this.

This leaves us with approaches 2 and 3, lockdowns without or with income replacement.  Right now, many African countries are defaulting to approach 2, as they’re cutting back on economic activity without replacing lost incomes.  This is clearly not sustainable. Many people are subsistence farmers who depend on markets to access inputs like seeds and fertilizer, or live in poor urban neighborhoods without regular access to water and food even at the best of times. Some governments are already using violence to try to enforce these unpopular lockdowns.  We can’t lose sight of the fact that hunger and violence are also threats to public health.

The best remaining option is approach 3, lockdown with income replacement.  Most African governments can’t afford to massively scale up their welfare systems in a short time.  But with a combination of donor support and targeted interventions to keep markets open while protecting vulnerable people, it may be possible to keep people from going hungry while also lowering coronavirus risk.

Protecting people’s incomes

Let’s start with options to keep people’s incomes stable, as it’s going to be impossible to promote any sort of social distancing if people can’t feed themselves while doing so.  The two options here are promoting a baseline level of regular economic activity, and giving people direct transfers of cash or food.

One option for promoting regular economic activity in a safe way is reconfiguring the physical spaces of retail markets so that people can continue to buy and sell with greater social distance.  This includes expanding the footprint of markets to allow for proper social distancing, installing handwashing facilities, and training retailers in safe product handling practices.  It may also be possible to do staggered lockdowns in various neighborhoods in order to keep markets open while controlling the total number of people entering at any given time.  Public transport remains a point of vulnerability, as many people have no alternative for getting around besides crowded mini-buses or motorcycle taxis, but it may be possible to distribute masks and hand sanitizer at bus stops or via transport unions to lower the risk of transmission.

Even if a baseline amount of economic activity can be safely maintained, many African citizens are still going to lose their livelihoods as demand for things like tourism and agricultural exports drops.  There’s a clear need for direct income replacement from the government. Since most people work in the informal sector, a Denmark-style approach to paying employers to keep their employees on isn’t feasible.  Instead, the best solution is to provide cash transfers directly to individuals.  (If agricultural markets begin breaking down, in-kind transfers of food may also be useful, but these are more difficult to organize than cash transfers, so they shouldn’t be the first step.)

The good news is that almost all African countries have existing social protection programs which offer cash transfers to poor citizens.  These programs do tend to have very limited reach, supporting only small percentages of the poor, but at least the infrastructure exists.  There are also cash transfers run through humanitarian aid organizations and through NGOs like GiveDirectly.  As of March 27, only a few African governments had announced plans to scale up their social protection programs.  However, most countries are early enough in the progression of their pandemics to be able to do this before infections peak.

African governments and aid donors should be immediately focused on scaling up the infrastructure for universal cash transfers.  Many African governments can’t unilaterally afford a huge increase in welfare expenses, and will face falling tax revenues during the period of the pandemic, so this is the ideal time for the major donors to step in and support them — ideally with grants rather than loans.  Time is really of the essence here.  Food prices have already begun rising, and will only continue to do so as imports get delayed or shut down, and domestic food supply is threatened by market failures.  Targeting cash transfers to the poorest also takes time, and in this case many people who were not previously extremely poor are about to lose their incomes, so targeting doesn’t really make sense from an ethical perspective either.

Protecting people’s health

But what about public health in all of this?  If markets and transport remain open, even with social distancing measures in place, there’s clearly still a risk of coronavirus transmission.  Many African countries have only a few dozen ICU beds for millions of citizens, and it’s going to be difficult to scale that up rapidly, given that every single country around the world is trying to procure additional medical equipment on short notice via already-stretched supply chains.  The Africa Centres for Disease Control and Prevention appear to be doing as much as they can to help countries acquire coronavirus tests and protective equipment for healthcare workers, but they can’t compensate for years of low investment in health systems overnight.

A research group at the London School of Hygiene and Tropical Medicine has proposed that public health resources in low income countries should be focused on protecting the most vulnerable populations, rather than trying to stop the spread of the disease generally.  This involves identifying people who are immunosuppressed or over 60 years old, and providing them with a package of services (like a safe place to stay and regular food deliveries) so that they can remain isolated from others during the course of the pandemic.  Younger people can continue to show up to work and keep markets open while they are healthy, and if they become ill, there will be more hospital beds available to them.

This strategy obviously has some limitations.  Coronavirus is posed to spread most rapidly in dense urban neighborhoods, where few people can afford an entire room to themselves and there’s no reasonable prospect of building new shelters.  The prospect of leaving home to go into a state-run quarantine facility is clearly undesirable unless the facility is well-run, which many will not be.  In addition, people with conditions like HIV or TB already face stigma, and may not want to self-identify in order to go into coronavirus quarantine. However, this doesn’t mean that quarantine interventions are doomed to fail.  Research on the 2014 – 2016 Ebola epidemic in West Africa suggests that building community trust is an essential part of developing effective, locally contextualized interventions.  Similar trust-building practices may be necessary to develop successful public health strategies in the age of coronavirus.

 

4 thoughts on “Using markets and donor support to mitigate the economic effects of coronavirus in African countries

  1. Ethiopia is trying to respond at different levels, which is a huge challenge. As University students are send home they are now availing the student dorms for usage of quarantine when the need arises. All organisations are being called upon to pull resources and space to avail in order to fight this crisis. The public is responding, we see that citizens are uniting, contributing in different ways – also food support.
    We know that in Ethiopia people are good in contributing and sharing resources when the problem rises. We hope that we will have enough medical staff to respond to sick people and that we have sufficient equipment to save lives.

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  2. With COVID-19 mitigation in Africa is even complexer. I think the task force must reassess the health workers per zone (in the case of Ethiopia) and make sure they get fast up-to-date information and communication package along with ppq and equipment and separate the health workers from their families (they worry about bringing the virus to their families and community) and supply them with food and necessities as long as possible. Let them speak and update the public via vlog so that people can see their battle field and care more. If possible these health workers need regular testing, and when infected quarantine to avoid their colleagues from getting infected.

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  3. With COVID-19 mitigation in Africa is even complexer. I think the task force must reassess the health workers per zone (in the case of Ethiopia) and make sure they get fast up-to-date information and communication package along with ppq and equipment and separate the health workers from their families and supply them with food as long as possible. If possible these health workers need regular testing, and when infected quarantine to avoid their colleagues from getting infected.

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