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African Crisis Response Policy: Learning from Pandemic

On March 26th Kenya’s President announced yet another lockdown, prompting immediate outcry from wider public, because unlike the first lockdown in March 2020 there were no economic support measures announced to try and cushion people from the impacts of a lockdown. Around the world, including in Africa when lockdowns have been implemented governments have deployed a myriad of support measures to cushion their citizens. The USA has deployed trillion-dollar stimulus packages with cash handouts to its citizens. The UK rolled out a multi-billion-pound furlough program that gave money directly to employers to keep staff on payroll even though they were not working. Around the continent we saw new and expanded cash transfer programs, tax breaks, stimulus spending, food aid and a myriad of programs all deployed to cushion Africans from potentially devastating lockdowns. However, the impact of these programs is not nearly enough to offset the damage done to livelihoods.  

The data shows that in Africa, the measures implemented to control Covid has led to declining employment, livelihoods, food security, and human capital. And it is our poorest and most vulnerable, such as those self-employed in the informal sector. In one study of 6 African countries, up to 76% of people reported a fall in income as a direct result of the pandemic and the measures employed to control.  

Unlike the USA we do not have two trillion dollars to throw at the problem. Furthermore, Africa is particularly susceptible to disasters, both natural and man made in the last five years we have seen an Ebola epidemic, Covid-19, locust invasions, devastating tropical storms, drought, floods, and landslides This means we must become innovative This means we must put in place mechanisms and policies that can respond to a crisis effectively while minimising their impact on the livelihoods, health, and security of Africans. It should not be about saving something impersonal like the economy but ensuring that people are, as far as is possible, able to continue with their lives.  

Building crisis response systems  

What should these crisis response systems that we need to build look like.  

1. Starting from the bottom  

For any crisis whether it is a pandemic, flood, drought, locust invasion etc. Its epicentre will be at the grassroots and that is where a response mechanism must start. The foundation of a crisis response system will be a community level mechanism that is capable of three things. First, engaging with its community effectively this is critical where the public will need to be educated, informed, or alerted during a crisis. Second, it must be capable of keeping up to date information that can be utilised for informed discussion making. We all now know about test and trace, but being able to identify, track and record is critical for tracking disease outbreaks, victims of natural disasters, pests that decimate crops etc. Third they should be from the communities they are serving, ideally even chosen by those communities. Trust is critical in community engagement, if that engagement is to have any impact having people from those communities who understand the nuances and dynamics of those communities and can speak to local context is critical.  

2. Speaking to the public  

In a crisis effective communication to the public is critical. You need to impart information that explains what the crisis is and what to expect, what measures people need to take to protect themselves or others, what the government is doing to help, and how people can access that help. African governments are particularly bad at this. The tend to speak down to their people, condescendingly giving orders rather than explaining the issue and asking for cooperation. Furthermore, communication tends to be sporadic, uncoordinated, and confusing.  

Communications must be done in a way that engenders trust and encourages people to respond in a way that reinforces the public good (e.g., wearing a mask). To be prepared for the next crisis we must put in place communications systems that can meet these requirements. Assess how people get information during crises and identifying who they trust. Then putting in place systems that during a crisis can engage and inform people and institutions so that the information put to the public from the government via traditional (e.g., the official spokesperson) and non-traditional (community workers, religious institutions, schools, etc.) is one and the same and is given in as broad and often a manner as possible. These systems and processes can be activated during future crisis and emergencies to engage and inform in a timely and effective manner.  

3. Supporting livelihoods  

As the numbers show, the biggest impact of the pandemic on the continent has been on livelihoods, and many African governments have implemented measures aimed at cushioning their citizens. However, responding to the crisis after it has happened is often too little to late. What’s needed is the development of flexible livelihood support mechanisms and plans designed for the specific African context. This could consist of social safety nets which I have written about in detail here. But beyond that we must look at how our economies function and the critical activities that we must endeavour to keep running to preserve livelihoods. Which means looking at things like markets, transport and logistics, and informal trades, talking to the people who utilise and rely on those things and collaboratively developing plans that would enable them to stay open and function during crises. How do we keep markets open during a pandemic, do stall owners, sellers and buyers understand sanitation requirements and do they have access to water and sanitation supplies? In the event of floods, which roads are most likely to be washed out, what can we do now to mitigate that. When Malawi first introduced a lockdown in April 2020 they faced an immediate backlash and protests from informal traders precisely because they had not thought of these questions. This is not Europe; people cannot simply stay home when they and their families depend on their ability to leave the house and earn a living. This could have been avoided entirely if the government had rather than copy what everyone else was doing stopped to look at its own context, talk to its own people and produce a relevant solution. We can do this in advance, it wont cost much and resilience we build into our economies will save lives.  

4. Working together  

One of the things that I have been most proud of as an African during this crisis has been the way in which many African states and institutions have worked together. The AU and the Africa CDC have been at the forefront of this. Coordinating resources and expertise between states to improve testing and surveillance, developing a common procurement portal so that African states could pool resources and get the supplies they needed during those first critical months, and setting up the AU’s Vaccine Acquisition Task Team (AVATT) to acquire and distribute vaccines on the continent. The cooperation and African multilateralism has been fantastic, but it could and should have been better. How can the AU, Africa CDC, EAC, ECOWAS, SADC etc. learn from the coronavirus pandemic to set up mechanisms that can respond to future crises. This pandemic has shown us that when push comes to shove America, the UK, Europe, China etc. will put themselves first. Hoard vaccines, restrict exports of critical supplies, corner the market on PPE, testing reagents and pharmaceuticals. As I have written about before the charity of other is not something we can rely on in global crises We can only overcome that by working together, agreeing in advance that when the next pandemic, natural disaster, global financial crisis, famine, flood, or even massive solar flare happens this is how we will cooperate. Most critically, we must share information, coordinate actions, where possible pool scarce resources and most importantly act with one voice on the international stage.  

Conclusion  

The Coronavirus pandemic has taught Africa several things.  

First, we cannot rely on the rest of the world to help in a crisis especially when they too are affected. As Africa has struggled to acquire the resources to fight the pandemic and the vaccines to end it the developed world has hoarded them. As a result, Africa runs the risk of becoming the pandemic continent exposed to new strains ostracised by vaccine passports. 

Second, we cannot simply borrow response mechanisms from others and implement them without thinking about our own unique contexts. How does a lockdown work in a slum? How does the informal sector “work from home”? The answer is they do not. And we must develop mechanisms that work for us and do not do more harm than they are trying to prevent.  

At the start of May, Kenya’s president announced an easing of the lockdown as the 3rd wave of Covid-19 eased. Yet a couple of weeks later, the ministry of health is warning about a 4th wave of Covid-19 in July. Kenya’s cycle of outbreak spike, lockdown and economic pain is set to continue.  

As the Kenyan example shows, the most important lesson is that there is no substitute for preparation. The pandemic caught the entire world by surprise and Africa must ensure that it does not happen again. Africa will face many crises in the near future and the only way to make sure those crises do not endanger the development of our continent is to put in place policies that give us the tools to mitigate their impacts and bounce back stronger.  

 

Charity is not policy.

Our donors, who art abroad, hallowed be thy purse. Thy aid come in dollars and pounds. Thy will be done in our countries, as promoted by Bono. Give us this day, our yearly funding. And lead us not into self-reliance. But deliver us from ourselves. For thine are dollars, the pounds and the euros, forever and ever. Amen – Elnathan John – Becoming Nigerian: A guide

On the 24th of February Ghana became the first country to receive a shipment of Covid-19 vaccines through the multilateral Covax facility. Throughout the pandemic (and one could argue throughout the post-colonial period) Africa has been the worlds charity case. Asking for and receiving billions of dollars of donations of PPE, sanitation supplies, and now vaccines. While all of this is lovely it is highly problematic. Relying on the generosity of the developed world to help us respond to crises or define our development agenda is tantamount to giving up our agency over those same issues, and it allows our political leaders to outsource responsibility for development or crisis response.

While the lack of vaccines, testing capacity, PPE is blamed on hoarding by the rich world, which is true, it should also be blamed our own inability to manufacture vaccines, testing materials or PPE. This is down to the bad leadership which outsourced development policy to those, with money and good intentions with pet issues, those who think that intellectual property is more important than responding to a global pandemic.

As millions around the world get vaccinated and Africa, reliant on the charity of others gets left behind to become the Covid continent. Hopefully, it brings us to the realization that charity is not policy. Over the last year, I have devoted much (virtual) ink to looking at how Africa could re-imagine capitalism for itself, forge a post-pandemic vision of development, stimulate our economies and measures we could take to respond to the crisis. All of that is useless, if we do not take responsibility for our own development and recognize that charity is not policy.

The problem with charity as policy

The problems associated with development aid and assistance charity in Africa are well documented. The creation of bloated self-serving bureaucracies that have little or no impact while allowing ex-pats to live charmed lives on the continent. Trillions of dollars spent with little to show for it. The self-serving nature of most spending which is spent on consultants and companies from the originating country. The use of aid to push various geopolitical agendas and to buy the support of African governments. However, this is not the most corrosive aspect of aid and charity on the continent that comes in two forms.

First, it robs us of our agency. Our development agenda is decided in London, Berlin, Washington, Beijing, and Geneva, in board rooms at various foundations and charitable organizations. It rarely has anything to do with what the “targeted” African communities actually want or need. Should massive infrastructure projects be the focus of our development spending, maybe, or maybe not, but that agenda was driven by the multilateral development organizations. The various development fads of microlending, SME/entrepreneur/youth/gender empowerment, digital identity etc. have all primarily come out of western research and institutions. If African development is not driven by the stated wants needs and aspirations of its people, then it does not serve them but the agenda of others. Charity serves the agenda of those doing the giving, not the receiving.

Second, aid and charity enable governments to outsource their responsibilities. Why should the Nigerian government bother to provide real services to the people of the oil-rich Delta region when the Oil companies will spend billions in building schools, clinics, and roads as part of their CSR. Why bother devoting real resources and policy to healthcare, health research and public health finance if the Gates Foundation, US-AID, The Wellcome Trust, and other donors are all pumping money into it. When you outsource responsibilities, you lose control of them as others decide what the focus of the money will be. Thus, our health systems have severely undeveloped but critical elements (like blood services, non-communicable disease prevention, mental health treatment, pharmaceutical research development etc.) because donors have other issues (and more often specific diseases or issues) that they care about.

The impact of this is all too clear to see. Development when funded by aid and Charity is done to us rather than by us. And, when problems that are not a priority for donors, like a global pandemic, come to the fore we find ourselves without the capacity to properly deal with them.

Conclusion – taking back our agency

After its independence in 1947, India made a very deliberate choice, facing serious health challenges among its large population, one of the critical things that India needed to vaccinate millions of people against TB, Smallpox, Polio, and other infectious diseases. However, at the time, much like Africa today, India was reliant on the importation of often expensive pharmaceuticals and biomedicals. The Indian government very deliberately set about investing in indigenous pharmaceutical companies, enabling them to build up R&D capabilities and most importantly the capability to produce pharmaceuticals in India. By the 1990s when India’s economy was being opened up these companies combined rapid growth in their own large domestic markets with global partnerships and continued investment and supportive policy from the government to become global players. The greatest example of this is the Serum Institute of India (SII), set up in 1966 to produce immunobiological’s, it was a beneficiary of the Indian government’s policy and today is the largest vaccine producer in the world. The majority of the Covid vaccines delivered to Africa are made by the SII.

Doing away with charity as policy means taking a lesson from India’s book. Making, deliberate choices to invest in areas that will wean us off dependence. It may take us 20 years to build up the infrastructure to produce our own vaccines, but it will mean that the health of our people will no longer be reliant on whatever others have to spare to deploy programs like COVAX or GAVI.

This thinking isn’t just limited to the health sector but will require us to make very deliberate choices and investments in the design and deployment of our education systems, climate policy, food security, transport, and science and technology. Not just for jingoistic, populist reasons that sound good on the campaign trail, but to free critical aspects of our development from whims of charity and geopolitics and put them in the hands of Africans. If we do not, when the next crisis rolls around, Africa will once again find itself left behind, begging bowl held out dependent on the charity of others.

Re-invigorating the pan-African dream through migration

By definition a foreigner is a person who lacks some fundamental right to make claims on the territory in which they are foreign. Today, too many Africans are unable to make these claims of their own countries. Too many Africans are still not at home in Africa. – Nanjala Nyabola (travelling while black p.134).

There are a few African history accounts on Twitter and Instagram and I often find myself scrolling through pictures of the heyday of pan-Africanism. That moment in the fifties and sixties when we were all fighting the same struggle. When we were debating what the post-colonial political economic and social landscape should look like. That moment died as African leaders became more concerned with consolidating power within their own borders, and our unity fell prey to Cold War power games.

Today the pan African dream is distinctly economic and commercial. At its centre is the African Continental Free Trade Area (CFTA) meant to bring the continent together as a single trading bloc. This is aimed at driving economic development through increased intra African trade. While this a laudable goal and one which I wholeheartedly support, the narrow economic vision of a pan-Africanism driven by trade is missing key elements. And in doing so it is somewhat hollow, appealing only to economists and business leaders rather than to the people it is intended to benefit.

The first element that the CFTA is missing is that for the real value of economic development to be realised the CFTA must be structured for MSME’s, small traders and entrepreneurs to take advantage of. They are the heart of the African economy and if free trade merely benefits big corporate entities it will be a failure. This something I have written about in detail here.

The second and most critical element missing from the equation is people. Africa’s Development must have her people at its centre. And the CFTA cannot just be about the movement of goods and capital it must also be about the movement of people. From an economic perspective restricting the movement of people restricts trade in services (which people perform), capital (which people own) and goods. But more fundamentally if Africans cannot freely move around our continent to discover each other, our cultures, common challenges and opportunities then free trade will be meaningless.

The European example

The 1957 Treaty of Rome, which established the European Economic Community (the forerunner of the EU in Article three says: “The activities of the Community shall include… the elimination, as between Member States, of customs duties and of quantitative restrictions on the import and export of goods…; the abolition, as between Member States, of obstacles to freedom of movement for persons, services and capital.”

These are widely known as the four freedoms, freedom of movement for goods, services, capital and people. The framers of the EEC coupled the economic with the socio-political because they correctly judged that the ability of people to move and earn incomes through the community not only increased incomes, but it created human links and bonds that reinforced those created by trade and in time has allowed for the construction of an EU wide political infrastructure.

As we design the CFTA we must learn from the European example and adjust it to our own needs. We are not looking to create a political superstate but looking to drive commerce, the exchange of ideas and increase the self-reliance, prosperity, and well-being of the continent. This requires people, not just a lack of tariffs.

Integrating and enhancing African migration

First off, it’s important to point out that African’s already migrate, and over 50% of that migration is between African countries[1], largely driven by peoples search for jobs and opportunities. On top of this the value of remittances by African migrants surpasses official development aid that African countries receive. In short African’s migrating throughout the continent are already a key driver of our economies, more important than the aid we jump through hoops to get, however much of this is still limited.

It can be notoriously difficult for African’s to officially travel within Africa. A combination of bureaucratic ambiguity, inflexibility, the cost of visa’s, flights, and the difficulty of obtaining official documents, make it easier, tragically, to go to Dubai than it is to go from Nairobi to Johannesburg.

Figure 1: source – the Africa Visa Openess Report 2019 https://www.visaopenness.org/

Cutting through this process is critical to driving to driving economic, social and cultural flows across the continent. Visa free or short-term visa’s on arrival are the simple answer, letting African’s travel hassle free across the continent on a short-term basis will act as a critical lubricant.

It’s not just enough to make it easier for Africans who travelling on the continent for short durations. Longer term migration, people moving from country on a more permanent basis to live and work is a key element of Intra-African migration. Unfortunately, it is often badly mischaracterised, with immigration demonised, where migrants are accused of bringing crime, and stealing jobs. And across the continent from the Nigerian expulsion of over 2 million Ghanaian migrants in 1983 to the xenophobic riots that have been seen in South Africa in the last several years. Contrary to the belief that migration contributes to growing unemployment in destination countries, UNCTAD found that migration in Africa is not associated with unemployment rather the contribution of migrants to GDP was measured at 19% in Côte d’Ivoire (2008), 13% in Rwanda (2012), 9% in South Africa (2011) and 1% in Ghana (2010). And, crucially, increased immigration in African countries occurs in parallel with improvements in education and health, especially for girls and women. In short facilitating and welcoming long-term migration from other African countries is good development policy. Thus, rather than demonising migrants, or playing into fears of the other by taking hardliner anti-immigrant positions. African policy makers need to put in place workable mechanisms to make intra-African immigration easier. Clear and easy mechanisms for obtaining work permits and residency visas would be at the core legalising much of the immigration that already takes place. And by legalising it, migrants can come out of the informal economy and fully contribute to the communities and societies in which they live.

Beyond the purely economic considerations, the building of stronger cultural, social and political ties across the continent will only happen when people can build those ties in person and there are policies that we can and should put in place to facilitate that such as:

  • Tertiary education exchange programs, that will bring our students, academics and researchers together.
  • Teaching African languages in schools.
  • Funding of cross border infrastructure to facilitate trade and movement
  • Implementing the Single African Air Transport Market to make air travel more affordable and accessible on the continent.
  • Removal and/or lowering of telecoms roaming fees and cross border bank charges.

Migration as development

The evidence from the effects of intra-African migration overwhelmingly show that it is positive for both the origin and host nations. The innumerable benefits that come with African’s moving, engaging, working, and doing business around the continent make it a critical and easy development policy. Furthermore, as the world enters a more fragmentary period, many policy makers have realised that it is critical that Africa come together to forge its destiny and prosperity. This is starting to happen again, particularly thorough multilateral African initiatives such as the CFTA for trade, and the Africa CDC for combating health challenges. However, the pan-African dream will never be realised through a set of narrowly focused initiatives, without a common connecting thread. That thread is people, African’s freely moving and migrating throughout the continent building ties and lives. That will be critical driver for development and cooperation across the continent. And as Nanjala Nyabola points out in her fantastic collection of essays on “Travelling while black” the pan-African dream whether cultural, political or economic will never become reality until we, accept each other as Africans rather than foreigners to be kept out.

[1] The Economic Development in Africa Report (EDAR) 2018 – Migration for Structural Transformation

Forging social safety nets for Africa

Social safety nets are often seen as luxuries for rich countries. However, as we Kenyans say “2020 has shown us things”. Across Africa, the coronavirus has seen governments across the continent implement a raft of measures to cushion their citizens against the socio-economic impacts of the coronavirus pandemic. For instance, Togo rolled out an expanded digital cash transfer program called Novissi and South Africa has expanded its existing welfare and unemployment benefits system. And these are not isolated policies. Having shown that social safety nets are possible. The question shifts, from can Africa have social safety nets, to what should longer–term African social safety nets, that alleviate poverty and confer dignity look like. 

The need for a social safety net  

 The world of work and employment is changing. Formal employment is less common, and most Africans do not earn a living in formal jobs with regular paychecks. The informal jobs and agricultural work that provides the bulk of jobs on the continent often provide uncertain incomes. Compounding this is the fact that African socialism (also known as the black tax) is becoming harder. Incomes are more and more stressed, and it is becoming harder for individuals to extend support to the family, and the community that has in the past functioned as an unofficial safety for many.  

What is needed is an expansion of the African community spirit of Ubuntu to the core of our formal social contract, with the state through well designed social safety nets, and we can do this by designing and implementing sustainable safety nets.   

Defining a social safety net  

 The start of designing a safety net is defining its purpose. Which should be, in my mind, at its core about putting in place a floor beneath which society says its members cannot fall. It is not intended to replace work, or even disposable income, but rather to ensure that people do not fall into deprivation and desperation.  

The second critical issue is simplicity, which covers two key issues.  

1 – Simplicity of targeting. That the people for whom the safety net is intended are clearly defined, e.g. households that earn less than a clearly defined threshold, or even all adults over the age of 18.  

2 – Simplicity of access. A social safety net does not function if the people it is meant for cannot access it. Thus, unlike countries like the USA or UK, we cannot develop notions of the deserving or undeserving poor, which lock millions out of critical support. Thus, the means of accessing these support systems must be easy to understand, easy to find and easy to navigate.  

The third critical issue is the sustainability of funding. This means identifying and defining a long-term funding mechanism. Not a donor or simple year on year budget allocation that is subject to political changes every year. But a dedicated mechanism like a specific tax, or a percentage of royalties from natural resource extraction, will ensure significant funding over the long term. In addition, a broad, sustained funding mechanism fosters a broad feeling of everyone having skin in the game and creates broad social and political support for a safety that will ensure its long-term acceptability and stability.  

Forging the net  

So, with those critical elements in mind, what does an African social safety net look like. Each country would undoubtedly choose its own unique combinations, there are options on the table that are doable and can be made distinctly African. Not copying western systems but shaping them to our needs. Such as a universal health care system based on the provision of quality primary healthcare, that cushions people from the often crippling costs of healthcare and vastly improves the quality of life. Or a basic minimum income that lifts people out of poverty and gives them a basic level of peace and dignity. Or even community/locally based support systems that are run and funded by communities and directed to the things and people that they consider most pressing with central governments providing additional funding.  

Social safety nets are not a panacea for the socio-economic problems that the continent faces. However, they can be an important piece of the suite of solutions that drive our development. But beyond that social safety nets can reshape the relationship between African citizens and their governments. Moving away from the colonial relationship that, persists in far too many countries of the ruler who sometimes hands out goodies to the ruled masses. To one based on the government genuinely looking out for its people, recognizing their dignity, and placing it at the core of our development.  

A new vision for African Capitalism

“Having come into contact with a civilization which has over-emphasized the freedom of the individual, we are in fact faced with one of the big problems of Africa in the modern world. Our problem is just this: how to get the benefits of European society, benefits that have been brought about by an organization based upon the individual, and yet retain African’s own structure of society in which the individual is a member of a kind of fellowship.” – Julius Nyerere

 

Markets are extraordinary things. They can drive innovation, wealth creation, poverty eradication and enable people to express themselves in new and creative ways. However, markets can also be incredibly destructive. The relentless drive for profits at its centre markets often lose sight of the welfare of communities, the environment, and most destructively concern for the wellbeing and prosperity of the future beyond the next quarter or dividend payment.

For the last 30 years, Africa has been subjected to the Washington consensus. Which can loosely be defined as a set of policy prescriptions for economic reform centred on market liberalisation. Africa was encouraged (sometimes forced) to adopt free-market principles and mechanisms in their economies, as the medicine for the economic malaise that plagued the continent at the time. Today after a global financial crisis, the unforeseen consequences of the free market success of globalisation, climate change, inequality and this year a global pandemic. It is clear that the inevitable logic of liberal markets cannot and should not hold.

The current crisis of capitalism is an opportunity, to break free from the unbridled capitalism of the Washington consensus and reshape it into an African capitalism. Which considers the unique structures of our economies and societies, as well as our aspirations. To create markets that enable opportunity, reshape our relationships with global markets and that have limits, on how much of our lives and communities should be monetised.

Africa and capitalism: a troubled history and lessons for the future

For the last several centuries Africa has had a troubled history with capitalism. Driven by western capitalisms relentless drive for profit, Africa has been exploited, a source of slaves, ivory, minerals, gold, oil, and other resources that are fed into the economies of more developed nations. This was the logic that drove the slave trade and imperialism, and it is no surprise that to this day Africa has been unable to integrate into or climb to the top of a capitalist system designed with us at the bottom. These structural issues remain to this day,

Beyond the structural issues, as Mwalimu Nyerere pointed out the modern conception of capitalism has its roots in western liberalism, which is highly individualistic. Communitarian values have deep roots in African societies. Where a responsibility to society as a whole, considerations of the welfare of future generations, the importance of the land and resources it holds are all held as guiding principles.

This does not mean to say the Africans are natural communists or socialists. We have a deep appreciation for the positive power of markets, hard work, individual expression, entrepreneurship and success. Thus, the question for policymakers becomes, not whether we should have markets in the first place. Rather what should those markets look like, how do we shape and regulate them to be the kind of markets we want, that will work for Africans? That magnify those things about markets that we value, but that do not cannibalise the community in the process.

Reshaping Markets

The first priority for African capitalism would be to reshape markets within Africa so that they promote and enable opportunity and competition, that enables African enterprise and livelihoods to thrive.

The first element of this is regulatory. Regulations are often a double-edged sword. First, they can be constrictive. A report by the Africa Development Bank looking at the regulatory environment that African businesses face found that “When asked about the major constraints to their operation and growth,   almost two-thirds of African businesses rate at least one regulatory  issue as a serious concern… Collectively, overall regulatory challenges are perceived as more severe than even infrastructure and access to finance.” African businesses especially small businesses face too many hurdles, thus, we need to redesign our regulatory systems. It is not about cutting regulations as ardent neoliberals have been advocating for years. It is about designing our regulations to fit our business context, which means:

  • Redesigning our labour laws to fit our informal sectors, and gig economies as well as the changing nature of formal employment.
  • SME specific regulatory regimes such as they have in Mauritius and Zimbabwe that make the regulatory regime easier for small businesses.
  • Integrating SME’s and the informal sector into larger policy frameworks such as trade, climate change and industrial policy.

The second is tax. Most African states have complex hard to comply with tax laws, meaning most businesses and people avoid it (or bribe officials too) increasing the tax burden on those that do. Simplifying this is key to easing that burden and creating a fair playing field. More importantly, the tax regime for big corporations needs to be reworked, through lobbying and interest groups larger corporations have carved out a multitude of tax breaks and incentives for themselves. Getting rid of these not only brings in more revenue but stops the big boys gaming the system at the expense of the smaller players.

Restructuring our relationship with global capitalism.

If markets are ever to truly work for Africa, we must restructure our relationship to global capitalism. Which has been structured to extract profits from the continent. Doing this requires a series of actions:

  1. Remaking the tax regime so that foreign corporations cannot minimise the taxes they pay on profits they extract from the continent so that Africa gets its fair share.
  2. Increasing transparency, especially in the extractives sectors, over who owns what. Until we know who actually owns the companies that extract our resources, we will not be able to control them or eventually make sure that Africa has a share of that ownership.
  3. Beneficial ownership laws, that give African’s a share in the ownership of corporations on African soil. Because if we do not own the capital you cannot benefit from capitalism.
  4. Using our voice in global forums to make sure that the issues that disproportionately affect Africa such as climate change and tax evasion, are not only on the international agenda but at the centre of coalitions of nations willing to take action.

Redrawing the boundaries around markets

Public health, public education, public infrastructure, the legal system, the police, public health, national statistics, a clean environment, street lighting, etc. these are all goods that benefit the public. They help form the social contract between citizens and their governments. And for societies in Africa, they are critical, not just for improving livelihoods and cushioning people from poverty. They are important because, through our various communities ranging from family to neighbourhood groups, to church groups, we support each other. What Africa and the wider world have experienced is a simultaneous failure of both governments and markets. Governments have pulled back from public services mainly due to ideological imperatives such as market efficiency (in Africa often imposed as part of structural adjustment or public private partnerships ). And the markets which were supposed to step in, and be more efficient, do so by leaving people out.

The answer is not to let public services decline further or give in to market failures. Rather it is to draw clearer boundaries around where markets should end and where the public good begins. The Coronavirus pandemic has starkly shown up the holes in public health systems, many of which have been caused by years of underinvestment, and shifting of the burden to private healthcare, where the those who cannot pay are underserved.

We solve this by having a clear policy on the boundaries between markets and the public good. By protecting in our development policies and laws the community obligations that we have as the social contract between African governments and their citizens.

African Capitalism

In the era immediately after independence, newly minted African leaders such as Tom Mboya in Kenya with sessional Paper no. 10 and Julius Nyerere with Arusha declaration were laying out political-economic visions to guide their nations. Many of those visions fell to the wayside or failed, for any of a multitude of reasons. But, as the world is at an inflexion point Africa once again has an opportunity to forge a vision of capitalism that that does not eat us for breakfast and then throw us a few coins of aid money to make everyone else feel better. At the centre of that vision should be a rebalancing between markets and the public good. With global powers facing severe challenges at home, Africa has the space to define what its capitalism should look like. Facing mass youth unemployment, untapped potential, and the societal tension it brings Africa has no choice but to redefine its capitalism and right now is a perfect time.

 

 

Participatory Budgeting for Africa: Development by the people, for the people, of the people

On the 13th of January 2020, the Matatu (minibus) operators of Kasarani in Nairobi had enough. The Kasarani – Mwiki road that was used by thousands of people every day was in a deplorable state, driving the transport operators, residents, and pedestrians crazy by doubling the price of public transport and travel times. So, they did what unhappy citizens in a democracy do, they protested. The residents of the area protested for 3 days, enduring the brutal attempts of the police to stop these protests. Tragically a 17-year-old boy was shot dead by the police, and only then did the relevant authorities and Nairobi’s elected leaders finally take notice and step in to commit to having the road fixed. This is not unique to Nairobi or Kenya, across the continent, people are constantly decrying the poor state of public goods and services that their governments deliver, in South Africa, they are so common they have a name, “service delivery protests.”

At the centre of this dissatisfaction sits the most impenetrable and stiflingly boring yet critically central government process, budgets. Complex and obscure by design, budgets are drafted and passed in a process that few understand, engage with, or can change. Yet how and where the government decides to spend public money has a direct impact on citizens, and far too often across Africa, those decisions are driven by private (often corrupt) interests or the priorities of lenders and donors. In my previous post, I argued that the pandemic has broken the system of economic, policy and political norms and Africa has an opportunity to reshape its vision of development. Part of that is recognising that markets cannot, nor should they do everything, especially delivering effective public goods and services. Coupled with that recognition must also be a change to the way that public money is spent on those goods and services because it is clear that the way we fund and hold public spending accountable is not working either. That we must bring the budget process closer to people so that it better reflects the needs and aspirations of our communities. How do we do this? Through an approach called participatory budgeting, where communities get to decide how public money will be spent in their localities.

What is participatory budgeting and how does it work.

Participatory budgeting is a process of democratic deliberation and decision making, where people come together to decide how to spend part of a public budget. It can take place on a small scale at the service or neighbourhood level, or it can be done at the city or state level. It is in reality remarkably simple people from a particular area or community come together to:

  • Discuss their issues and priorities,
  • Identify projects or services that would address those needs,
  • Vote on which one of those is going to be funded,
  • Monitor budget execution, procurement, and project implementation.

Some may argue that this is how traditional budget processes work. That the public can participate in the formal budget process by going to public participation forums and lobbying their legislators. However, as someone who has been involved in this process, it is exceedingly hard for ordinary citizens to get their concerns across. Lobbying, around government budgets, is dominated by corporations, special interest groups and politicians and it is usually focused and tax breaks, subsidies, and pet projects. Civil society is often relegated to the periphery and individual citizens are barely heard. Furthermore, this national or regional budgeting process prioritises projects and programmes at those levels over local issues that may not affect a large enough number of people to get noticed. The divide between people and their political establishments is at the widest during the budgeting process. It is hard to access the process of budget making and it is so big and complicated it is nearly impossible for the average person to understand. Here is Kenya’s budget for this fiscal year, thousands of pages of impenetrable numbers, spending and project codes, hard for even an economist or accountant to make sense of. Yet it determines how much money goes to health care, building roads, schools, paying the police etc.

Participatory budgeting does not stop national or regional budgeting, rather it just sets aside a certain amount of money for local communities to use. This is not an alien concept to African countries, where there are already various forms of federalism or devolution that see national governments give tax revenues to regional units to use in their own budgeting process. Participatory budgeting is an extension of subnational decision making at a more localised level, but most importantly it involves the participation of groups that are usually side-lined. The poor, minorities, women, and those who typically feel their voices are not heard but do not matter. By showing up, and participating, the things that matter to them can not only be heard but get funded.

From Porto Alegre to Paris

In 1989, the newly elected Workers’ Party overturned the decision-making process so that citizens decided how a portion of a city’s budget was spent. By 1997, sewer and water connections went up from 75% to 98%; health and education budgets increased from 13% to about 40%; the number of schools quadrupled, and road building in poor neighbourhoods increased five-fold. Importantly, participation in budgeting meetings grew from fewer than 1,000 people per year in 1990 to about 40,000 in 1999. Extraordinarily, participatory budgeting not only encourages people to pay taxes and fees but, in some cases, people have even asked for higher taxes – because they can see where it goes.

In 2014, after a new mayor was elected, Paris began the world’s largest experiment in participatory budgeting. In its first incarnation, Parisians could vote on how to spend €20 million on 15 possible projects identified by the city. The next year they began a comprehensive participatory budgeting exercise. €65 million was set aside and citizens generated and voted on their own project ideas. Between 2014 and 2020, the city has committed to reserving €500 million to be spent through participatory budgeting. In 2016, 158,964 people voted on how to spend nearly €100 million, including €10 million set aside for schools.

Paris and Porto Alegre are not the only cities to have tried participatory budgeting, more than fifteen hundred cities around the world have implemented some form of citizen-led budgeting. Showing that not only is it effective but it can be adapted to wildly different contexts and cultures.

Making participatory budgeting work in Africa

How can we make participatory budgeting work for Africa? Crucially, we should not be too prescriptive the contextual differences between countries, urban and rural areas, within cities, between arid, desert, coastal and forest areas, are too broad and diverse for a one size fits all solution. Rather, what we can focus on is putting the right elements in place that would allow participatory budgeting to take root.

  • Leadership buy-in. This has been critical in fostering a working and positive citizen-led budgeting process. Getting mayors, governors, and other local leadership to buy into the process creates the political space and bureaucratic support for it to work.
  • Engagement and the involvement of local civil society and community leaders. Who can help raise awareness and at least initially act as a trusted interlocutor between citizens and governments they are sceptical of.
  • Critically for participatory budgeting to work, people need to be able to participate, which means setting up spaces both physically and online where people can access information, propose ideas, debate them, vote on them and later track their progress.
  • Fundamentally for participatory budgeting to work, there must be a specific ringfenced budget available, which requires governments to set aside money that citizens can utilise.

This may all seem unlikely, but whether it was in 1989 in Porto Alegre Brazil, 2004 in Torres Venezuela, or in 2014 in Paris, these elements can and have come together. I see no reason to think that it cannot happen in Africa.

Democratic dollars

A study of participatory budgeting in Brazil not only found participatory budgets to be effective, but also to be versatile and flexible and led to the inclusion of traditionally marginalised groups in their governance.

Across the continent, we don’t just have a leadership problem we have a governance problem as well. We vote for “leaders” every few years and spend the intervening period complaining about their ineffectiveness, lack of service delivery, corruption, and stupidity. To fix this I firmly believe we must deepen our democracy and ground the policymaking process in the real needs and aspirations of citizens. Participatory budgeting is one way of doing this, giving communities a say in where some of their tax money goes, and actively seeking to address their needs and concerns. Democratising some of the Rands, Kwachas, Cedi’s, Shillings and Naira’s that are spent in vain on development every year.

It is not a panacea; our problems are diverse and will not be solved by one thing. But by bringing the power and the money closer to the people we can not only fund projects and services that are critical to those people we can strengthen our democracies and systems of governance. And that in doing so we can reshape the social contract and connection between the governed and their governments to be a genuine one of consent and delivery rather than the apathy, disappointment and coercion that all too often defines the social contract in Africa. And just as importantly, it will help Africa build a future where whole communities do not have to riot, and young men lose their lives for want of service delivery.

Where next for Africa: a new vision for new development policy

As Africa continues to battle the public health crisis and the socio-economic impacts of the COVID-19 pandemic, I have been amazed, befuddled and despondent all at the same time at the responses we have seen. How African medical professions have responded and coordinated with resources and budgets that are tiny in comparison to their international counterparts. How nations like Togo have moved to cushion their citizens and the ingenuity and innovation shown by individuals and companies have all given me hope. The hope that we have the imagination, drive, and generosity to confront and overcome any challenge. However, the police brutality and human rights abuses and in some cases the outright denial of the virus by some has also given me pause for thought and reminded us how easy it is for our demons to take advantage of a crisis.  

Like many, in both my work and my writing I have been preoccupied with, as Dr King once put it “the fierce urgency of now”. How do we stop the virus, protect livelihoods, and reignite our economies? These are all valid concerns that deserve significant thought and effort. However, it strikes me that we also could and should be thinking beyond the pandemic. Crafting a vision for our continent that takes advantage of the extraordinary opportunity before us.  

The global pandemic has broken norms, systems, and preconceptions, which had limited the range of possible actions and policies we were able to pursue. Out of crisis comes opportunity. 70 years ago, Europe used the devastation of a world war to remake itself as a bastion of social democracy and regional cooperation. That required vision. People who recognised that despite the devastation, there was an opportunity to break with the past and reimagine what Europe could be. And went on to sell those visions to politicians, and people to create a shared vision that could be worked towards. Today the member states of the EU may squabble, but they do not plunge into periodic globally destructive wars and their citizens enjoy a near border-less continent with broad strong social safety nets. 

What is our vision for our countries, regions, and continent? What can we rally around, work towards and achieve for us and our children? There is an opportunity to build a better Africa out of this global disaster and we must seize it.  

The system is broken, and the opportunity is open 

The global Coronavirus pandemic has fundamentally broken or changed a number of aspects of global politics, economics, and policy norms that Africa can take advantage of.  

1. Capitalism is being questioned  

Markets are powerful things that can do a lot of good. However, this pandemic has reminded us that when markets are skewed and inequalities exist those will be amplified by crisis, and, more fundamentally that markets cannot do everything. Public goods and services, like public health, cannot be privatised and subjected to market efficiencies without consequence. Markets must have limits. Out of their failure during this crisis, we can remake them, to be fairer and draw boundaries around where the logic of markets ends and the public good takes precedence and we can remake the social contract to have fair markets and strong public services reinforcing each other.  

2. Social safety nets are possible.  

Before the crisis things like basic income, housing for all, or UHC were all dismissed as too expensive, too unwieldy (especially for African governments) and potentially undermining hard work and personal responsibility. In a crisis that was no one’s fault, we have seen governments design and deploy large scale social safety nets like cash transfer programs and rapidly expand public health systems to protect the most vulnerable and deal with the crisis. This is can also be a reality beyond the pandemic, Basic incomes and universal health coverage can be done and will be powerful tools for ending poverty.  

3. We can make things  

The pandemic disrupted global supply chains and across the continent things that were once easy to import suddenly had to be made here. Lo and behold we have discovered that we can make things like Personal Protective Equipment, Ventilators and even our own tests. If we can make things, we must make sure we never end up in a situation where we cannot produce the medicines and medical supplies we need, where we cannot supply our construction industries or stock our shop shelves. In short, there is an opportunity to rethink our industrial policies (as I have previously written about) around industries and businesses that now recognise the need for resilient local supply chains.  

4. Corporate tax is cool again  

With all the government spending that is going on around the world, it will eventually have to be paid for somehow, and there are few better sources of revenue than the multinationals adept at gaming the system. As countries around the world clamp down on tax avoidance and evasion Africa can do the same. Reshaping its tax systems (as I have written about previously here) to tax profits where they are made. An Africa that can replace aid and debt with sustainable revenue is an Africa with her destiny in her own hands.  

5. Global political space 

Global geopolitics, for so long defined and defended by the USA is fragmenting. With the USA becoming more insular, China on the rise but untrusted, a Europe busy trying to hold itself together, Africa has an opportunity. To reject the notion that we are a playground for global power games and redefine ourselves as a leader on issues like climate change, tax and trade that have for so long befuddled others and negatively affected Africa. Even forge a new alliance with emerging and middle powers around the world who do not hold ambitions of domination but of shared prosperity and calm. 

6. We are young and hungry  

Millennials around the world are despondent cohort, our working lives defined by recessions, pandemics and polarising politics. However, in Africa, this is not necessarily the case. I am constantly amazed by the determination and refusal to give up that the continents young people display. Young African’s are inventing, innovating, and breaking barriers in culture, business, science, and politics. Rather than being depressed like our western counterparts we can be Generation Hope. We must harness the hustle, embrace the creativity, and nurture the deep yearning for a better tomorrow. A crisis of the magnitude we are experiencing now opens the door for us to experiment, to leap into the unknown led by a generation of hope.  

That vision thing  

In these opportunities, brought about by an unprecedented crisis, I see the space to construct a new development vision for our continent. A vision anchored in the dignity of our people. A vision that looks to achieve our own moon shots of ending poverty, disease, and desperation, where our fates are decided in our capitals rather than those in foreign lands. And where prosperity Is not built by climbing over the backs of others but through our innovation and drive that allows us to stand on the shoulders of each other.  

My writing usually addresses dry development policy subjects like budgets, trade, and labour policy, but fundamentally development policy is anchored in a vision of a better future. For the last 30 or so years, those visions in Africa have been stunted by uninspiring inhuman aims such as achieving middle–income status or industrialisation. The pandemic allows us to once again centre our development visions on the dreams of our people. Visions that we can identify with, rally around, work towards together and proudly proclaim our individual roles however small in achieving those goals.  

Without an underlying inspiring vision, our development policy is lost. It is misdirected into white elephant projects, filled with other people’s priorities, and spelled out in consultant gobbledygook and buzzwords. The crisis of the pandemic offers an opportunity to reclaim and reframe Africa’s development vision, let us seize it.  

Core features for African Post-Covid-19 economic stimulus packages.

The global coronavirus pandemic has not only put public health and health systems under threat it has undermined livelihoods, businesses, and economies across the continent. As a result, many policymakers are turning their attention to how to get those economies started again, as they shift from the public health response. Some countries such as South Africa and Kenya have already released details on their stimulus packages. Each African country will need to come up with a package that works for them specifically. However, as diverse as these packages may be there are some core features and opportunities that I think apply to most if not all African states. That will not only aid in jumpstarting their economies but lay a foundation for long-term growth through tax reform, building social safety nets, and putting money in the right places. African states may not have the financial firepower that the developed world has deployed to keep their economies alive, but with some creative and bold policymaking African governments can not only jumpstart their economies out of the Coronavirus malaise but also lay the foundations for long term growth.

Investing in the right places

There are two sectors, agriculture, and the informal economy, that define sub-Saharan African economies, and will require specific focus in any form of stimulus.

Agriculture is the foundation of the African economy. At least 60% the population of sub-Saharan Africa are smallholder farmers, and about 23% of sub-Saharan Africa’s GDP comes from agriculture. Stimulus measures aimed at the agriculture sector are critical. This should include

  • Subsidies for inputs (fertiliser, seed, pesticides, etc.) for farmers, that will ease the cost of farming in a tough year.
  • Heavy investment in small farmer training and education that will enhance the skills and productivity of small farmers.
  • Investment in rural infrastructure such as warehouses and rural roads that improve farmer incomes cut the cost of storing and moving goods from farm to market, making those goods cheaper for consumers.
  • Facilitating through guarantees the provision of credit to businesses along the agricultural value chain that provides services to farmers, move agricultural goods or process agricultural goods.

Boosting agricultural incomes, productivity, and efficiency, will not only help drive growth out of the crisis but also help make food cheaper and more plentiful for consumers. In short, an agriculture targeted stimulus could be the foundation for long term food security

The second critical sector is the informal sector. The IMF has estimated that on average the informal sector contributes between 25% and 65% of GDP in Sub-Saharan Africa with Mauritius and South Africa at the low-end under 25% and Tanzania (over 50%) and Nigeria (over 60%) at the other end, and that the sector accounts for between 30% to 90% of non-agricultural employment.

For the informal sector, the key to a stimulus lies in cheap credit (or grants if the government can afford it). Many informal businesses have been subjected to weeks or months of low business volumes (or none at all) due to restrictions put in place to control the virus. This means they do not have working capital, to reopen and restart they will require this capital, and cheap credit is a quick and effective means of providing it. Governments can provide credit to Micro and small enterprises (as most informal businesses are) through existing channels that the informal sector already uses, such as mobile lending, cooperatives, savings groups, and microfinance institutions. Restarting the informal sector is critical to ensuring that people have jobs and incomes, livelihoods that do not just keep the economy turning but the food on tables and kids in school.

Combined the agriculture and the informal sector account for at least 40% of most African economies and are the primary providers of employment. The design of any African economic stimulus must have a significant focus on these two sectors if it is going to have any significant impact.

Tax reform

Some countries have introduced a set of tax cuts to ease consumer pain and help save businesses money. While tax relief will help a bit, outside of South Africa the tax base of most African countries is simply not big enough for tax cuts to have a big simulative effect.

However, taxes are a problem across the continent. African governments, do not collect enough taxes relying on a narrow base of taxpayers paying into a system riddled with tax loopholes, breaks and exemptions. Furthermore, the crisis will put millions out of work and cut the revenues of businesses significantly. However, as the American saying goes, never let a good crisis go to waste. This crisis presents a perfect opportunity for African governments to pursue genuine tax reform, that will help broaden the tax base and mobilize domestic funding for development rather than debt.

We can do this by reforming the tax system to make it, simpler. Make it easy to pay, easy to track and hard to confuse, this can be done through a combination of.

  • Removing existing individual and corporate tax breaks and exemptions while bringing down headline corporate tax rates.
  • Removing transfer pricing loopholes that allow large corporations to avoid paying local taxes.
  • Put in place new frameworks that will assess the proposed and existing tax breaks based on their verifiable impact. In other words, the impact of existing tax breaks should be clearly evident in the data and the justification for a new tax break should also include clear indicators on if it is working. This would prevent the myriad of loopholes creeping back into the system

Getting more companies in the tax net, on an evening playing field while doing away with all the complexity that enables the avoidance of taxes will broaden the tax base. This can be accompanied by a marginal lowering of headline rates as there will be more people and companies paying taxes. A smaller burden on more people will result in less stress on consumers and companies and higher tax revenue when the post-crisis recovery starts.

Safety Nets

One thing the crisis has done is put severe stress on the safety nets and support systems that most Africans rely on. Those with jobs, both formal and informal, often support their immediate and extended families. Foreign remittances (migrant workers sending money back home) has grown by ten times in the last 2 decades. This is a critical source of income and support for millions around the continent and in many countries is one of the largest sources of foreign currency and inward investment. Domestic and international transfers which essentially form our social safety nets are being ravaged. As the domestic economy sheds jobs and opportunities, incomes whether formal or informal will be cut or lost entirely. Internationally, as we have already seen job losses will be immense, and African migrants will be part of that and the World Bank expects international remittances to fall by 23%. Millions around the continent will be without vital support from struggling friends and families and governments must step in. This can take one of two forms:

  1. Give people money. Cash transfers (as I laid out in a previous post) are simple and effective and in a crisis potentially lifesaving. In Togo the government has deployed a cash transfer program called Novissi targeted at people whose daily income is no longer guaranteed due to disruptions caused by the Coronavirus crisis, using existing mobile money platforms. The cash transfer does not fully replace people’s incomes, but it does provide a lifeline, ensuring that people do fall into desperation. It also shows that a mass cash transfer program is possible and need not break the bank.

 

  1. The second option is to invest heavily and quickly in the provision and delivery of key services. Ensure that critical needs such as power, healthcare, sanitation are provided cheaply or free as widely as possible and that critical income-generating venues such as food markets can run with social distancing and sanitary measures in place, that would ensure income generation but also keep people safe.

Neither of these two solutions (or a combination of both) should be short term solutions. Building viable social safety nets is a key need across the continent and if included in a stimulus package, they could be the basis for long term remaking of the social contract across the continent. Without putting in place viable safety nets to replace the informal ones that are being worn thin by the pandemic we may see more people forced into desperate poverty, which would set endanger millions more lives and threaten social stability.

Speed is key

 

The primary goal of any stimulus plan is to move an economy out of a crisis or recession. To do so the stimulus must be deployed quickly before too many businesses and consumers go broke or permanently change how they do things. In deploying their stimulus programs, African governments must ensure that they are deployed quickly. Businesses need credit before they go bankrupt, farmers need inputs before the next planting season and people need to eat today not next quarter. Getting a stimulus package out of government treasuries and into the economy as quickly as possible will amplify its effectiveness.

The right type of stimulus

 

No two stimulus programs will be the same, African economies are diverse and the priorities of each government differ. However, there are common features across the continent that will need to be addressed. With limited resources, we must be smart and bold. That requires putting our resources where the majority of African’s earn their livelihoods in the agricultural sector and informal economy. Making sure that vulnerable communities whose livelihoods have been decimated or support systems undone, get adequate support. And it is an opportunity to reset a tax system that is not fit for purpose to one that can raise the resources we need to fund our long-term development.

African economies need a jumpstart out of what the IMF is calling “an unprecedented threat to development”. As we design our stimulus programs, we must do so in a way that does not just tick the boxes of orthodox economic thinking but addresses the realities of our economies and looks to the future.

 

 

Making it through the crisis: Africa’s crisis response policy

A few weeks ago I wrote a piece on what Africa can do to kickstart its economy and drive long term growth after the coronavirus crisis has ended. What’s becoming clear is that the crisis will be longer and deeper than many had first thought. This poses the question, what policies do we need to put in place so that when it ends, we are in a position to kickstart a recovery.

African governments do not have the financial firepower or operational capability that developed countries have deployed. But I do not believe that means we are hobbled. As policy responses around the world are showing, what was previously thought impossible, too expensive or too complex is doable. The same applies to Africa. To make it through the crisis we must abandon the art of the possible and attempt the impossible. This crisis presents critical obligations to African policymakers, that we must be bold and creative to save lives, livelihoods and possibly the state itself. This crisis also presents policymakers with an opportunity, to redefine what policy in Africa can do, particularly when health, wealth and well-being of its people are at its centre.

The Nature of the crisis

This crisis is unlike anything Africa has seen before. Its effects are multiple, simultaneous and intense.

First, this crisis will last longer than many of us thought. Until there is a widely available vaccine or cure, we will continue to see outbreaks, travel restrictions, social distancing, quarantines etc. In various parts of the world and Africa as governments try to avoid a second wave. Considering the staggered way in which the virus has spread across the world, it’s estimated that the most severe restrictions will continue for the next 3-6 months and various restrictions could remain in place for up to 18 months until medical solutions are widely available.

Economically the World Bank predicts the continent could lose between $37 billion and $79 billion in output and face a recession of –5.1% (negative 5.1%). Furthermore, agricultural production (the most important sector in terms of output and employment on the continent) could contract by between 2.6% and 7%. This is an economic disaster for the continent. The formal sector will be defined by falls in productivity, revenues and severe job losses. In the informal sector which accounts for 89% of employment on the continent, its traders, farmers, vendors, MSME’s, tradespeople who rely on daily incomes are facing disaster if those incomes are disrupted endangering their ability to afford food and shelter not just for them but also the people who rely on them.

This crisis will also stretch our healthcare systems, in many cases past their breaking points. Endangering, the lives of those with Covid-19 and the lives of those who need medical attention for things other than Covid-19 (expectant mothers, HIV-AIDS patients, cancer patients, malaria patients etc.).

Internationally, help (financial or technical) from the traditional donor/development aid community will not be as forthcoming, as it has been during previous crises, as they try to deal with the crises within their borders. Thus, Africa cannot rely on the international community as we have become accustomed to doing.

With all these effects, in responding to this crisis we have to have a core goal. That we have to keep our people fed, healthy and secure livelihoods as far as is possible. Which means designing and implementing a mechanism to enable people to keep themselves fed and secure. Providing lifelines to the informal and formal sectors, so that people have livelihoods to sustain themselves in the long run. Restructuring how our governments communicate with the public to ensure that the measures taken are as effective as possible and provide a foundation for re-forging our societies.

Keeping people fed and secure

This is probably the biggest headache facing African policymakers in their response to the crisis, and many will default to what they know, distributing foodstuffs. However, what we need in a situation like the current crisis where millions of people who were ok now fall into vulnerability, is a solution that is big, simple and fast. One solution that encapsulates all three is cash transfers. Give vulnerable populations money and trust them to know how best to use it. As I have previously written, cash transfers are effective, and people are rarely irresponsible with them. With innovations like mobile money which has permeated across much of the continent, it is possible to get money where it needs to go and to do it quickly. And, it avoids the mess of corruption and delays associated with government procurement. Finally, it puts money where the economy needs it. In the hands of consumers who buy their food and other essentials from the informal economy, keeping those value chains alive.

How do we pay for this? Simple, print money. The UK is doing this. Those afraid of inflation should note that the money would be replacing depleted economic activity, thus limiting the inflationary impact.

Reinforcing health systems

First, African countries need to devote more resources to public health. For decades we have let public health fall into a state of disrepair and underfunding. Over the short term, this needs to be remedied by immediately ramping up funding, and resourcing over the short term to fund the immediate Covid-19 response. As well as thinking through how to implement public health measures in an African context. Rather than lockdowns, how can we make markets which are critical nodes of the food system sanitary and credibly social distant? How do we make informal settlements where people share multiple spaces as safe as possible?

But it also represents an opportunity to start long term investment in community health. If we want to keep hospitals free to treat Covid-19 we need to deliver care to people in their communities. This means public health communication and education, provision of basic care at a grassroots level and investing in preventative infrastructure (sanitation, water, clean cooking etc). That could over the long-term form the basis of a viable universal healthcare system.

Paying for this will require shifting resources for normal noncritical spending (non-salary and critical operations) to the health systems, delaying or freezing development projects and tapping into capital markets (borrowing) where possible.

A lifeline to the economy

Through no fault of their own, businesses across the continent are suffering as demand falls, export markets go into lockdown, their supply chains are disrupted, and their consumers stay at home. To save jobs, livelihoods and in some cases whole industries. Many governments have already put in place tax holidays and encouraged banks to renegotiate loans with businesses. However, in a recession predicted to be deep, more is needed, and this could consist of several measures such as:

  • The utilisation of domestic private sector capacity by the government as part of the crisis response. Using streamlined public procurement to buy goods and services (e.g. Masks, logistics and transport, beds etc.) that are needed by the government to respond to the crisis. This will help keep some local businesses alive and build local capacity.
  • An SME loan program divided into two tranches. The first tranche would be given now, to keep SME’s alive and the second tranche would be given when the WHO declares the crisis over to enable SME’s to quickly restart their operations. This can be done by the banking sector backed by a guarantee given by the central bank in case of defaults. The guarantee would have 2 conditions: low-interest rates and a 6-12-month grace period before the loan payments start to give SME, breathing room. This would have the effect of giving SME’s working capital and keeping the credit system alive.
  • Safe business programs. Many businesses require social interaction such as open markets, salons & barbershops, restaurants bars and clubs, etc. We should be developing guidelines and rules for safe interactions in these businesses that integrate sanitary measures and social distancing (where possible) to enable these businesses to reopen as early as possible without endangering public health.
  • Utility bill and commercial rent holidays to ease pressure on businesses with reduced cash flows. Utility providers and commercial landlords can be provided with tax credits to offset the reduced revenue. I

Communicating with the public

I have written previously on the need for effective and persistent communications strategies to be built into policy design. This is critically important during a crisis, where not only do the public need to know what is happening, they need to buy into it, trust what their governments are saying and understand that it is being done for the public good. For that to happen governments have to change how they communicate with their publics from talking at them to engaging with them, this means:

  • Be honest. Now is not the time for bluster or false assertions. If governments lie and people die as a result, trust will be fundamentally broken, and people will be unwilling to listen again. Thus, governments must lay out the truth to their people, what this crisis will do to every one’s health, livelihoods and general welfare and why they are implementing exceptional measures.
  • Explain your thinking. Governments will be implementing measures that will affect people’s lives in a multitude of ways. As the heavy hand of government, intervenes in people’s lives in unprecedented ways, the government must explain why, what drove the thinking, and what they are hoping to achieve
  • Accept and respond to criticism. No policy response will be perfect. Being able to acknowledge where something has not gone as planned or was not implemented properly and communicating real action taken to fix it, will build trust and support.
  • Communicate often. This is a constantly evolving crisis; people need to be updated regularly. In times like these, there is no such thing as talking too little.
  • Engage across channels. To reach everyone, you must go where they are, which means going beyond traditional media onto social media, and breaking language barriers. If information is inaccessible, then it may as well not exist.

Communicating, honestly, effectively, and openly will help reshape the relationship that has been characterised by a lack of trust between opaque African governments and populaces that have long been indifferent to whatever pronouncements and declarations those governments make. Rebuilding trust can be the basis for rebuilding the sense of community and society that too many African countries have lost, reinforced by genuine efforts to assist people.

A pan-African response

Though the international community may be pre-occupied, it does not mean the pan-African community cannot respond. Though we may not have the money or the resources that the developed world can deploy, we can cooperate to ease the pain of the crisis. Critical areas of cooperation would be:

  • Sharing data and information on how the pandemic is evolving in each country. providing public health officials and policymakers valuable data on the epidemiology of the virus within similar demographics that can help every country fine-tune their response.
  • Sharing policy responses. What measures have implemented in other African states, how effective have they been, can they be adopted elsewhere.
  • Sharing resources. If the crisis has eased in one country but is ramping up in another, they could provide resources (equipment, personnel, money) to help in that fight.
  • Buy Africa first. Stimulating the African private sector by encouraging African governments to buy what they cannot find at home (e.g. if there is a food shortage) in other African countries before looking abroad.
  • Engage the world as one. While African states do not agree on everything, this crisis will bring us together on various things. One of the most important of those things is Debt. Africa needs debt relief to give it the fiscal space to pay for the virus response and a post-crisis stimulus. Rather than have each African country go to its bilateral and development partners on its own to beg for debt relief or a payment pause. The message will be much more powerful if the continent speaks and negotiates with one voice, increasing its bargaining power and the momentum behind the issue.

Unprecedented crisis – an unprecedented response

This crisis is unlike anything Africa has ever seen before. Even the Ebola crisis of 2014 did not threaten the whole continent and had significant international assistance. It is hampering our health systems, economies and socio-cultural way of doing things on a scale we have never had to deal with.

This is by no means a comprehensive look at the policies that can or should be implemented. The policy interventions I have presented are a few among many that a lot of talented and clever people are thinking of across the continent. What I have tried to lay out in this piece is that this dual health and economic crisis is a threat to us all. And responding to this crisis requires a multi-pronged approach that is big and bold. That will need African governments to get out of their comfort zones and implement measures such as cash transfers which they have termed too expensive or too hard,  shift money from cherished infrastructure and other projects to the health system, invest in the private sector especially SME’s in new ways and talk to the public in a more genuine way.

If we do not respond in a big and bold manner, many African nations will emerge from this crisis hobbled, suffering extended socio-economic aftereffects and much more likely to suffer civil and political unrest. If we can respond with boldness then we could lay the foundations for a genuine recovery after the crisis, a public health system that isn’t an oxymoron, a reset of the relationship between private enterprise the and public good and a  much more positive relationship between the government and its peoples. I’m hopeful that maybe, this time, African leaders and policymakers will recognise this crisis for the threat it is and start thinking big and acting boldly.

After the crisis: driving Africa’s post-Coronavirus recovery

Right now, and understandably so, African governments are focused on dealing with the immediate health crisis presented by Covid-19. Preventing the spread of the disease among African populations and treating those who are already sick, are the priority of government right now. However, eventually, this crisis will pass, public health authorities will eventually manage to control the spread of the disease and effective treatment measures (or vaccines) will be developed. When the crisis is over its negative economic impact will become clear, and African governments will need effective strategies that to foster economic recovery in the short term and a medium to long term strategy to fix the fragilities in African economies exposed by the crisis.

The economic impact of the crisis

For Africa, this crisis will have many effects on the economy.

  • For oil and commodity-exporting countries, the fall in prices will drastically cut their tax revenue as well as related incomes within the economy.
  • Disruptions to trade will hit manufacturers and projects on the continent as they cannot get enough of the components or raw materials they need. Similarly, retailers who import goods to sell may run out of stock. Combined this will drive inflation and possibly force manufacturers or projects to shut down.
  • Disruptions to trade will also hurt those economies such as Kenya, Ethiopia, SA, and Ghana who export agricultural goods and produce, where the majority of the population is involved in agriculture, falling prices and exports will hurt incomes of both businesses and households.
  • The tourist industry, which is a top income earner in several African economies will be severely hurt by the travel restrictions and quarantines on the primary tourist markets in the USA and Europe. Across the continent’s tourist destinations, hotels, conferencing destinations, resorts, parks etc, will be bleeding money and jobs. While the continent’s airlines will be suffering massive losses as passenger numbers plummet.
  • A global economic downturn will shift investor sentiment, international investors will be warier of investing in Africa and we are already seeing the impact as stock markets across the continent register large falls as international investors withdraw their funding.
  • In China (which is now Africa’s largest trading partner and investor) the government will be more focused on economic recovery at home. Meaning that some of the expected Chinese investment on the continent will likely be delayed.

Short term response – kickstarting the economy

For all African economies, the combination of a global economic slowdown and the economic impacts described earlier will decrease both private sector activity and public sector revenues and spending. In an environment where most African governments were already struggling with large debts and deficits, what can we do kickstart the economy once the crisis is over.

Forget spending focus on tax

The first impulse of much African government will be to spend, to use the government’s ability to spend large amounts of money to create demand within the economy. Frankly, this won’t work in Africa at least over the short term. This is because African governments are incredibly inefficient (and often corrupt) so it not only takes a while for governments to spend money it also means that the not all the money intended for a specific purpose necessarily reaches it. Secondly, the money has to be found, which for many governments on the continent is a problem.

A short-term policy response intended to kickstart the economy must be something that is quick and has an immediate impact on the bottom lines of businesses and people’s pockets and the best tool for that at the moment is taxes and credit. For businesses, the key is helping them preserve cash flow so they can make it through the worst and drive a recovery.

  • There are a lot of taxes and fees that are levied on the short term (monthly, weekly, or daily) income of businesses (especially SME’s) such as turnover taxes, or licenses. Governments should consider waiving these for short term (3 to 6 months), that will enable businesses to preserve cash flow.
  • Statutory payments to public social safety net schemes e.g. health insurance, social security etc. which are usually paid by businesses on behalf of employees could be waived for the short term which would make it cheaper for businesses to retain people in employment.
  • Work with banks and the wider financial sector to come up with solutions (e.g. invoice discounting backed by government bonds) that would ensure that all pending government bills are paid quickly. This would put money in the pockets of companies that business with the government quickly, which will help ensure there is cash flowing through the system.

For individuals and households, the highest impact thing government can do to put money in pockets and help demand recover is again taxes, specifically VAT, which is often levied on (almost) everything. If VAT can be waived, for the short term, on critical items that people commonly buy (food items, data and mobile phone credit, soap, water, electricity) it will give people some extra money which they can spend on other things, and help drive the recovery of aggregate demand within the economy.

Long term response – long term growth and resilience

The crisis has exposed some key fragilities in African economies. But, as the Americans like to say, never let a good crisis go to waste, in other words in crisis there is an opportunity. Africa can use the opportunity of this crisis to build in greater resilience and the foundations of long term growth into its economy.

Trade

Africa can take advantage of the fragility that has been exposed in global supply chains. Companies both in Africa and globally will be looking to diversify their supply chains so that in future they are not as widely disrupted by a crisis in a particular part of the world (namely China).

With its significant labour pool, government focus on industrialization and improving infrastructure Africa offers a potentially attractive location for diversified supply chains.

For African companies specifically, governments would do well to focus on those goods and products whose production and distribution has been disrupted and encourage their production in Africa. Taking advantage of the soon to be active Africa Continental Free Trade Area, African based supply chains could prove to be more resilient for African producers and consumers than those based abroad. Investing these would not only foster resilience but create jobs and income as well.

FDI

As happened after the global financial crisis Central Banks in the developed world have responded by cutting interest rates, as a result, yields on government bonds are close to zero or in negative yield territory. This will likely be the case for some time after the crisis has passed as Central Bank’s try to fuel a quick recovery. As a result, investors from these markets will be looking for higher yields from their capital, which they cannot get at home. This will give them a greater appetite for risk with the payoff being higher returns, Africa will present multiple opportunities for these investors to try and take advantage of with their greater risk appetites. If we identified the right project’s and opportunities (such as privatisations or stock market flotations) that would benefit from these flows, and package them right we can direct this money to places where it will have a long term positive impact.

Domestic investment

International capital markets will be distorted for some time after this crisis, by central bank and government stimulus policies. It will thus be important to put in place policies that encourage domestic investors (e.g. pension funds, mutual funds, etc) to engage with and invest in African businesses and commodities.

Structural reform

Crises offer governments the opportunity to address issues that would otherwise be politically impossible to address. For instance, a public health crisis emphasises the need for Universal Health Care, an expensive proposition which government are not usually brave enough to attempt. However, a health crisis offers the opportunity for a fundamental reshaping of the health sector. The same goes for government finances, its hard to take away MP’s perks, the cars of senior civil servants, cancel the vanity project of politicians. However, a public health and economic crisis can serve as a valid reason to cut the fat that will not elicit too many questions or a fightback.

Conclusion

Just as we cannot afford to be lax in how they respond to the crisis, African governments cannot be lax in how they deal with its economic consequences. Otherwise, an economic crisis will follow swiftly on the heels of the public health on. If we do not have a strategy to deal with it we may end up with an economic crisis that disrupts more lives than the Coronavirus.

As I have suggested in this article there are tools that the government can use over the short term to put more money in the hands of businesses and individuals. This can help spark a recovery. Over the medium, to long term, there are a number of policies that government can pursue to equip Africa economies with the tools they need to weather future crises as well as lay the foundations for a more robust African economy.

Crises suck, we have to ensure they don’t last longer than is necessary.