Published in Daily Graphic Newspaper (Centre Page)
Resilience and Recovery from the impact of covid19 is the most pressing and topical issue across the world now; health care professionals, governments, corporations and even religious bodies are putting in their best effort to ensure a total eradication of the ‘pandemic’ as has been described and accepted by the World Health Organization (WHO), the leading international organization in the fight against the deadly novel corona virus. This has led to Africa’s first economic recession in 25 years recording -3.3% GDP growth in 2020. The International Monetary Fund (IMF) estimates that the pandemic “could drive up to 40 million people into extreme poverty in Africa, erasing at least 5 years of progress in fighting poverty”. The tourism, hospitality and transportation sectors are the hardest hit due to travel restrictions and eventually the energy sector due to the drastic reduction in demand and the fall of prices on the world markets. The tourism sector is estimated to have lost about 115billion USD so far. Governments need to create the fiscal space along with strong policies for a rapid recovery (green stimulus). For example, the IMF reported that since March 2020 it has made available 250billion USD lending capacity available to member countries to help them fight the pandemic through various arrangements. In Africa and many parts of the developing world including Ghana, the consequences could be more dire and long lasting if the right structures and mechanisms are not put in place to build adaptive capacities and more so cause a rebound of these economies. In most parts of Sub-Saharan Africa (SSA), agriculture is the largest employer even though its largely dependent on the rains with limited capacity to adapt. This raises concern for food and national security respectively as well as survival of the vulnerable. Coincidentally climate induced disasters such as droughts and floods are on the ascendency according to studies by the IMF and other bodies as illustrated below. Over the medium term, annual per capita GDP growth can decline an additional 1% point with each drought in SSA, which is six times worse than in emerging developing economies in other parts of the world.
Ideally the first call of action is containment of the disease but unfortunately in this case we will have to respond and build resilience at the same time towards a sustainable recovery. There is a need to build capacity to protect development gains. There is also a need forsocial protection measures which will safeguard the vulnerable in the society. Investing in a smarter, digital economy is no longer a bargain but a must. For example, 2.5% of African firms have accelerated the use of digital technology and investments in digital solutions. According to studies by the IMF, expanding internet access in SubSaharan Africa by 10% of the population could increase real GDP per capita growth by as much as 4%.
The need to build a smarter, greener and more equitable future has never been this important given the circumstances of Africa; with a youthful population of about 77% of the continent’s population. There is an urgent need to give hope to the bulging, helpless, unemployed masses who have been severely impacted by this global crisis. This could actually heighten the already existing security threats such as insurgency and pockets of ethnic conflicts scattered across the continent.
How do countries like Ghana ensure they build back better for a more resilient recovery? Given the well-established reality now that the only safe way out is constantly observing the safety protocols and eventually getting vaccinated. I believe this will be one of the major questions on the minds of decision makers and many well-meaning people. As much as the pandemic is gruelling, this is also an opportunity to reset.
A recovery that raises resilience will not only save lives but will also translate into higher standards, better quality jobs and equal opportunities for all. Priority should be given to investing in people, infrastructure and coping mechanisms i.e., healthcare, education, research and development. The dividends will be in growth, productivity, gender equity and better living standards. Good infrastructure is the backbone of a healthy and resilient economy. The paradigm shift this time round will be the investment in Infrastructure that is smart, green and inclusive.
Along the line, there should also be better education on the impact of climate change. This is because the outbreak of zoonotic pandemics such as the corona virus have been established to have strong linkages with disturbances of the natural habitat of animals and the natural environment
A recovery or building resilience is going to be expensive given the limited fiscal space and the rapidly increasing public debt. Developing countries including Ghana will need the support of their external partners to initiate and sustain transformative reforms through policy induced disruptions to improve public finance management systems, revenue mobilization and efficiency of collection. Countries will need debt-relief, financing and capacity building support. In this regard international cooperation for debt relief is critical for survival of developing countries. This will be essential in creating better and inclusive jobs for a faster, stronger and inclusive recovery. To consolidate the gains, there has to be effective monitoring of spending, enhancing public debt transparency and ensuring prudent borrowing. Governments must commit to use relief resources to enhance social, health and economic expenditure in response to the crisis. Emergency procurement should be guided against irregularities. Procurement regulations may be helpful in this regard as is said that ‘regulation is helpful when government’s capacity is low and harmful when it is high’.
G20 countries backed by the World Bank in May, 2020 established the Debt Service Suspension Initiative (DSSI) under ‘the common framework’ to help indebted countries concentrate their resources on fighting the pandemic and safeguarding the lives and livelihoods of millions of their citizens. Under the initiative, there are 73 eligible countries for a temporary debt-servicing suspension owed to official bilateral creditors. So far over 5billion USD have been delivered to 40 countries according to World Bank data. The suspension was expected to end by Dec 31, 2020 but has been extended to June, 2021.
The Paris Club of major creditor countries have adopted ‘the common framework’ of the G20 but has no private creditors involved, no debt cancellations granted and has also excluded vulnerable middleincome countries. This has become a major concern and disappointing for various civil society groups, who say promised debt cuts could have come with a green/inclusive recovery trade off. A case in point is Nigeria’s COVID-19 response facility from the African Development Bank (AFDB) which has in it a green and inclusive recovery dimension by allocating funds to renewable energy development and women businesses. The case is however unfriendly in Zambia, as the country had to default on its sovereign debt obligations in a fix of whether ‘to pay or to spend’ given the current circumstances and what the cost might be. Congo for example had to renegotiate a suspension of debt obligations with China but at higher interest rate compromising the future of the country.
Despite the challenges of the pandemic, it is also an opportunity to rework our societies to achieve work-life balance which can also help close the gender gap. Gender equality should be a top priority for a resilient society. Businesses will have to build faster decision-making mechanisms which can be facilitated by improving internal communication and collaboration and enhanced use of technology. Public investment must be ramped up to attract additional private investments using transparent and accountable systems. There is the need for digital transformation in SSA by investing in a digital friendly traditional infrastructure and digital-ready information technology infrastructure. Public investments can serve as the green stimulus for economic recovery by building health care, schools, safe buildings, safe transportation and digital infrastructure which will all serve as ‘fiscal multipliers’ to attract the private sector. Access to new technologies i.e., telemedicine, drones, greenhouse farming, improved seeds, early warning systems and weather information can help farmers and doctors adapt more effectively.
The health pandemic should be tackled in tandem with the climate crisis to achieve sustainability. The society has to be redesigned to be more resilient to global shocks, thus sustainability and resilience programs have to be integrated into economic recovery. People must be at the centre of the recovery and resilience solution. Nature based solutions should also form the core of the response building in line with the Paris Climate Agreement, the Convention on Biological Diversity and the Sustainable Development Goals. Climate smart agriculture is the future proof way of farming hence the need to build digital skills for this sector and beyond for job creation especially with the boom and takeover of the services sector.
Countries prevalent to severe weather/climate events need to invest in weather-resilient infrastructure. Investing in digital and climate resilient infrastructure such as renewable energy will reduce carbon emissions, spread electrification and create jobs which are co-benefits of sustainable development. Access to electricity using small, off-grid, solar-powered energy plants, financial inclusion using mobile money and microfinance schemes are all coping mechanisms that need to be strengthened to help serve as buffers and compensate for lost income for people and businesses. Digitalization supports better policy design and better economic outcomes as has been proven with the mobile revolution.
Unfortunately, recovery measures in major economies like China, India, Mexico, USA and Australia etc. has had mixed or no responses to a green recovery with few exceptions like South Korea and the EU, who have shown clear intentions as part of its European Green Deal. The Ghana CARES/Obaatanpa program should be used to chart a green recovery pathway. It should not be about just a short-term economic recovery but a long-term sustainable recovery with resilience embedded. This and more must be supported to secure the transition to a zero emissions society.
Lastly, there has to be equitable distribution of newly certified vaccines to the rest of the world; developing and developed, leaving no one behind. On that, I make reference to a famous quote (paraphrased) from Dr. Martin Luther King Jr. “A disease anywhere is a threat to safety everywhere. We are caught in an inescapable network of mutuality, tied in a single garment of destiny. Whatever affects one directly, affects all indirectly”.
In the end, the world and Ghana will have to make a choice of embracing the New Normal by creating the virtuous cycle of a resilient future or breaking the vicious cycle of repeated rebuilding.
Happy New Year and Stay Safe!!!
By Thomas Kankam Adjei,
Climate and Energy Policy Analyst
kankamthomas@gmail.com
27th January, 2021