Posted by News Express | 5 May 2020 | 1,724 times
Unlike other crises, COVID-19 is a pandemic of the worst kind. It is exploiting our way of life in the most opportunistic way. Many of our routine interactions occur in proximity. Whether it is accessing formal education or healthcare, attending meetings or parties, in our houses or neighbourhoods, at work or travels. These are the very routines that connect people and determine life outcomes.
In response to the outbreak, the virus has forced us to disrupt local, national, and international travels and global supply chains. COVID-19 has not given us any good choices or options that we yet know of. Because the virus can cause severe illness and death, our first reaction is to prevent its spread. To give scientists some time to understand the virus, to find an effective treatment, cure and vaccine. Until then, we know that the virus can cause severe illness and death and the only tool available at least to delay the spread of the virus is blunt.
To borrow the description of the International Monetary Fund (IMF), the “great lockdown”, has provoked large scale global social and economic reactions and caused disruptions, the likes of which the world has not seen in a generation. A global health crisis that is striking hard at the very foundations of modern civilisation.
The making of a health care crisis of global proportions
COVID-19 triggers multiple chains of destructive, disruptive, and dreadful events, in the absence of a drug and vaccine. While the data from around the world shows that most people infected by the virus will not manifest severe disease, a significant number (that we have no way of knowing before they do), will. Those who develop moderate to severe disease will require hospitalisation. Some of them will require intensive care.
But all health care systems have limited capacity for hospitalisation. Because health care systems are in fact designed to keep most people in good health and out of hospital admissions. It makes common sense that way in normal times. The resources that would have been consumed providing hospital care are saved and reallocated to produce other human needs. People in good health have the mental, psychological, emotional and physical strength to join others in co-producing the goods and services that we all need. It is no wonder that the pandemic [nearly] overwhelmed the capacity of otherwise strong health care systems. From testing capacity constraints to health care workers shortages to limited hospital beds, intensive care units (ICU) and ventilators to the lack of Personal Protective Equipment (PPE), most countries have experienced shortages of some kind in their response to the outbreaks of COVID-19.
COVID-19 creates the very conditions that cause panic. If human to human contact is not reduced, those who have the virus will easily infect many other people. Because until people have been tested, many of them do not know that they have the virus. Some people have mild symptoms that are non-specific, while some others may have symptoms that have not been previously observed and documented on COVID-19. If the number of people who test positive to the virus increases rapidly (albeit testing capacity), it is likely that many people may require hospitalisation and care at the ICU.
Soon, the capacity of the health care system will become overwhelmed. If this happens, the health care system will not be able to cope with the COVID-19 patients, as well as meet the health care needs of other members of the population. As it has now become obvious, the health care system also loses existing capacity due to lack of adequate safety-nets and protections for health care workers. The shortages of materials (especially PPE) and the pressure on health care services, increase the exposure of health care workers to occupational health risks. Some healthcare workers may become infected, others may experience burnout due to work overload and yet others may suffer mental health problems resulting from traumatic experience during this crisis.
If this cycle were to continue unstopped, the entire population will soon be at increased risk of COVID-19 and other illnesses. Morbidity and mortality rates would worsen. This is what is described as the first-order effects of this pandemic causing virus. To reduce these effects and the possible ensuing chain of events, countries are ramping up testing and case identification, isolation and contact tracing. This is part of a strategy to reduce the number of people that one person with COVID-19 could infect if they come in contact (the effective reproductive number — R). Reducing R below 1 is the key to unlocking part of what is required in flattening the COVID-19 epidemic curve. Social distancing that includes lockdown, stay-at-home and keeping a physical distance of about 6ft are an important part of the mitigation strategy. Also, regular hand washing or alcohol-based hand rubbing, and the wearing of face masks. These interventions are expected to reduce the spread of the virus within a given population and period, which would, therefore, result in the flattening of the epidemic curve in that population.
The starting position of various countries entering the pandemic, continue to determine the health, social and economic response and outcomes. It would also determine how various countries recover from the pandemic. At the time of writing this article, a total of 252, 301 (Johns Hopkins University Coronavirus Virus Resource Center) people are reported to have died from COVID-19 globally. The pain and grief to many families, friends and communities have been unimaginable. The lives of many people who survive this pandemic may never be the same again.
A health crisis and its second-order economic effect
Add the economic impact of the pandemic and the picture gets even clearer and gloomy. The economic data from around the world does not look good. The lockdowns and disruptions to global and national value and supply chains and markets have resulted in an economic meltdown. Tens of millions of people across the world have lost businesses and jobs and now face imminent financial catastrophe. While rich countries are trying to minimise the economic impact on citizens and households, poor countries are constrained. This could have implications on development and security going forward.
The IMF forecast is that the global economy will contract by 3.0 per cent during 2020, given the high degree of uncertainty. Some sources forecast that the UK economy could shrink by 2.6 per cent in 2020, while other sources have projected the economy shrinking by as much as 5.0 per cent in the first quarter of 2020. The German economy is projected by some sources to shrink by as much as 10.0 per cent in the first quarter of 2020, and the French economy may contract by about 6.0 per cent in the first quarter of 2020. Spain and Italy are expected to contract by 5.2 per cent and 3.0 per cent respectively. The Canadian economy is projected to contract by about 3.8 per cent in the first quarter of 2020. According to Bloomberg reporting Goldman Sachs projections, the Japanese economy is expected to contract by 25.0 per cent in the first quarter of 2020. The US economy contracted by 4.8 per cent in the first quarter of 2020. And the Chinese economy contracted by 6.8 per cent in the first quarter of 2020. Predictions are that the second quarter of 2020 may even be worse for some of these major economies.
Post-pandemic economic recovery and geopolitics
How the world and different countries would recover from this pandemic will depend on their economic fundamentals and geopolitics. The latter is becoming obvious. (1) It is an election year in the United States (the world’s most powerful country and largest economy) and a lot is at stake. (2) The virus causing COVID-19 was officially first identified in Wuhan, China, raising all kinds of speculations and theories. (3) Geopolitics and COVID-19 pandemic among other complex range of factors have interacted to drive down oil prices, in many cases, below production costs. (4) China’s investments, activities, and broader ambition in the world, and especially in Africa are being exploited. All the above in dynamism would create uncertainty which would have a significant influence on the global environment, going forward. It is conceivable that economic recovery may not be so straightforward for the world and for many countries. While the countries with the largest economies would also struggle, it would be much tougher for countries that are discounted by the principal actors in global power competition and geopolitics, and the countries that depend largely on the export of commodities.
It is true that China has benefitted a lot from economic globalization. But it is exactly what has made corporations in Western countries much bigger that has made China so rich. Low-cost manufacturing in China and access to the large consumer market in China and the rest of the world have accounted for large corporate profits, fuelling the growth [if you like, bubble] in financial markets to the benefit of a few. It is the increase in Chinese demand for raw material inputs by Chinese manufacturers and China’s big Western corporate partners to meet local demand and for exports that have resulted in trickle-down economic effects, to mineral-resource rich countries. It is the seeming interdependence (albeit unfair and unequal) between countries that globalisation has enabled and global peace dividends that make globalization appear ideal. However, it is the inequality associated with globalisation that exposes its opportunism. Whereas globalisation has made some countries much richer, inequality has grown in both richer and poorer countries, and poverty has become more visible.
The impact of globalisation on social and economic structures in many Western countries represent the perfect conditions for exploiting people’s fears for political gains. Especially populist nativist nationalism which elicits raw emotions and passion-fuelled by the fear that leads to anger, danger, and destruction. Obviously, China is currently the world’s manufacturer arguably of last resort. Its influence on global value and supply chains which are of significance to almost every country, sector and industry, is enormous. This is a position of mixed fortunes. A position of both power and vulnerability in global trade. The lessons (real and imagined) from COVID-19 pandemic, regarding supply chains and shortages, are beginning to generate discussions about how deeply and risky the dependence on China, the US and indeed the entire world is. Some people within the corridors of power are now suggesting the decoupling of their value and supply chains and their economies from China.
Just as important background to all these is that the United States considers China as a competitor. The very reason for US national security considerations and implications. But why? After all, the US and China are the two largest economies and are very interdependent. The global economy very much depends on them for the supply of global liquidity, new technology, goods, and services. There is no doubt that as the US 2020 general election season approaches and begins to heat up, China will be an important reference in political conservations, campaigns and debates within the context of COVID-19 and US national security, and around the world. There are already talks in the US about punishing China for being responsible for the global spread of COVID-19. Whether this is all political talk or not, it has the potential to define the global economic environment. After all, China owns about US$1.2 trillion of US debts (only second to Japan) and exports more to the US than it imports. There is leverage on either side.
The appetite and desire for popularity and political gains, and to win an election that may yet prove quite consequential, could cause political talk to creep into real policy actions that could transform the global economic, political and security landscapes. Just imagine that it is estimated that the rest of the world owes China over US$5.0 trillion. To put things in perspective, Chinese lending to the world is more than that of the IMF, the World Bank, and the governments of countries that make up the Organisation for Economic Co-operation and Development (OECD), combined. China is indeed the world’s largest lender. Such level of wealth is enviable and an easy target in a world in which many nations and billions of people are so poor. Some people might say that China earned its wealth. After all, China has a labour force of over 800 million out of which over 776 million hardworking, skilful and talented Chinese were employed in 2018 producing for the world to consume and for wealth to be created and distributed unequally. There are also those who would complain about Chinese intellectual property theft and trade manipulations.
That said, the global exposure of China, the behaviour of its businesses and people, and the declared and undeclared intentions of China can also be the reasons [or excuse] for anti-China sentiments. The latter may be the exaggeration of conspirators on their own mission. It may also be influenced by the real impact of COVID-19 on global and national health systems and economies. The threats of legal actions against China (with or without the supporting factual circumstances of the virus) can be a slippery slope. These threats and actions could worsen an already challenging global political and economic set of conditions. What would happen when the next pandemic breaks out in another country?
How African countries should respond
Most African countries were caught by this pandemic already in bad shape. COVID-19 pandemic is likely to make the situation worse. Many African countries that depend on the extractive industries and commodity exports will struggle as it is. As bad as the health, social and economic effects of COVID-19 are, it should provide the opportunity for African countries to fundamentally rethink their economy.
Most African countries can have a thriving local economy that is managed to serve the needs of the people. Except that African politicians, policymakers and their economic advisers continue to think of the economy mostly in terms of US$ earnings from exporting raw materials and commodities. Their references are about what US$ earnings can buy in terms of the imports of finished consumer goods and services. In their current state, African countries would struggle to earn enough from exports to continue to finance imports for consumption, machinery, equipment, infrastructure and to service debts. Inequality, therefore, will worsen. Political power will continue to determine access to and the distribution of limited resources. This approach mystifies the economy for what it should not be for the majority 80–90 per cent (or more) of the population. An economic approach that creates an environment of scarcity. A chaotic environment in which only the ‘fittest’ survives. Such an environment will confine the majority to poverty. For all the pain and suffering that this environment causes, the economy that it promotes only serves the acquired sophistication, culture and taste of the few. This is not sustainable, and it can have existential consequences.
Most African countries, under the current local and global conditions, should not monetize, financialise and thus seek market solutions for every problem, for-profit ends and greed. Especially when the proposed solutions are linked to global value and supply chains that are denominated in US$. African countries cannot yet compete globally. First, because the political leadership of most African countries have failed to organise their people, land and markets, to reduce risks, encourage enterprise and attract investment. Second, because most African countries are not net beneficiaries of global geopolitics.
This is the time for Africans to define the economy in terms of people. How well can African countries utilise a spectrum of tools in both non-market and market toolboxes to improve quality, scale and to link local production to local consumption to support a competitive and an improving standard of living for all. The continent has most of what it needs. It has land and mineral resources – from which all the things that are imported into Africa are made. Given the right political and policy environment, most African countries have a diverse pool of talents that can convert abundant natural resources into the goods that it currently imports. Africa has land for agriculture to first feed its people and then to explore opportunities in global value and supply chains. Africa can create jobs that all its people need to become co-owners of their respective countries.
What Nigeria should do
The mobile phone and internet penetration in Nigeria can be transformed into the means by which we survey, isolate and conquer this virus while minimizing the health and economic impact. That is how countries emerge from crisis stronger. Nigeria’s response to COVID-19 should not be containment, mitigation and to wait for a drug or vaccine to come from outside Nigeria. Its response must be containment, mitigation, courage and ambition to back our best brains to fail and learn or to succeed while keeping the doors open to breakthroughs from other parts of the world. It may well be that Nigerians living and working in other parts of the world may have contributed to such breakthroughs.
Finally, while a few people continue to exploit the current situation, there have been many acts of kindness and sacrifice during this COVID-19 crisis. From food donations to financial support for the most vulnerable to accurate information communication and much more. These inspiring acts of community and solidarity are what countries need to emerge from this crisis. And, the healthcare workers who continue to fight this disease, so that others may live, are indeed the best of our humanity.
In Nigeria, the government, politicians, business leaders and ordinary Nigerians have also been donating money, medical supplies, food, etc. to vulnerable Nigerians and to the fight against COVID-19. This is commendable. But, as the evidence shows, the number of vulnerable Nigerians in dire need of support even in normal times are far too many. It should not be. This crisis has worsened the plight of most Nigerians. These donations are helpful but will hardly be enough. COVID-19 is a sad reminder of why “we are in it together.” Nigeria needs a different kind of economy. One in which every Nigerian contributes and every Nigerian benefit.
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