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‘Business as Usual’ in Post-COVID Worsens Vulnerability

FROM: Essam Yassin Mohammed , Zenebe B. Uraguchi – 07. May 2020
© green queen

How should the post-pandemic recovery contribute to inclusive and sustainable social and economic transformations? Three issues are key for reimagining our development pathway and addressing some fundamental vulnerability and social justice issues. First, social protection programmes are essential to mitigate the impacts of the crisis. Second, we need to use the opportunities from the crisis for enhancing green transition. Third, a global crisis of such an unimaginable scale needs global action. It’s in everyone’s interest that all nations come together and bolster their commitment to international development cooperation.

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We aren’t epidemiologists or virologists. Neither is this another blog speculating over when the COVID-19 crisis may end or whether a cure will be found soon. If that is what you are looking for, this blog isn’t for you.

Instead, we ask a fundamental question: how should the post-pandemic recovery contribute to inclusive and sustainable social and economic transformations?

Like any (other) economic, climatic or health crisis, evidence is emerging that the pandemic is hitting the most vulnerable the hardest. Low-income groups; small-scale food producers; those with limited access to finance; municipal services and those who work in the informal sector are disproportionately being affected. 

Why should we be concerned about this?

Beyond the moral imperative, this is a major risk to the tremendous achievements in reducing poverty and promoting social justice across the globe over the past few decades. Despite growing inequalities within and between countries, global extreme poverty has declined significantly. To put this into perspective, 44 percent of the world’s population lived in poverty in 1981; today, this has dropped to 8 percent. Unemployment has also been consistently falling and more people than ever have been in work.

These gains can easily be wiped out by the ill effects of the pandemic unless we seriously think about reimagining our development pathway and address some fundamental vulnerability and social justice issues.

Safety net for the vulnerable

In many countries, and particularly for those most vulnerable sections of our societies, the COVID-19 pandemic is a ‘crisis within a crisis’. It exacerbates the negative impacts of climate change, political fragility, economic inequality, hunger and so on. Social protection programmes are essential to mitigate the impacts of a crisis. The programmes are a range of safeguards needed to reduce the consequences of poverty and exclusion across the life cycle of people -- from child and family benefits to employment benefits and old-age pensions.  

Social protection isn’t a luxury. We believe that there needs to be a universal access to social protection schemes. In areas where resources are limited, and blanket coverage is not plausible, we argue that those most vulnerable cannot withstand the unprecedented climate, economic and health shocks and need to be prioritised. Such schemes should be seen as an investment in creating a healthy and thriving society. The cost of not protecting the vulnerable and letting millions of people fall into poverty can be, beyond just being immoral and unjust, of an unprecedented magnitude.

We also realise that the universally agreed Sustainable Development Goals (SDGs) requires the implementation of ‘nationally appropriate social protection systems for all’ (SDG 1.3). Globally, a staggering 71% or 5.2 billion people aren’t, or are only partially, covered by social protection programmes. These are the people who are exposed to shocks and risks and struggle to rebuild their lives when a crisis hits.

You may be asking yourself: ‘great idea, but who will foot the bill?’

Indeed, providing access to social protection schemes can be costly. In most developing countries, the average cost of social protection programmes can be as high as one to two percent of their gross national product (GDP). Many studies have found that the return to investment (not expenditure by the way) of social protection schemes always outweighs the cost.

If there’s a political will, most countries can reprioritise public expenditure, thereby significantly increasing resources available. In addition to financing, other challenges of social protection programmes include targeting, complex registration systems and insufficient information to beneficiaries. Yet, countries like Rwanda (Vision 2020 Umurenge Programme –VUP), Mexico (PROSPERA), Brazil (e.g. Fome Zero), and Ethiopia (multiple: cash transfer schemes, community-based health insurance) have put into place good social protection programmes.

One also needs to consider the cost of inaction or not putting a social safety net for the most vulnerable and the consequent socio-economic crises that may occur. Social protection programmes are more than economics; they are part of basic human rights. Unless we get this right, COVID-19 will be yet another force of exclusion and discrimination that will worsen inequality.

Enhancing green transition

COVID-19 has brought several economic activities to a halt. People are either increasingly working from home, or have been furloughed and many unfortunate ones have lost their jobs. This has been one of the most economically and financially distressing events in recent history.

However, shrinking economic activities have led to improved environmental performance. There are encouraging trends that show a dip in coal and oil demands across the globe. Many cities are experiencing significant drops in air pollution. If air warming gases continue to drop at this rate, we have a rare chance of meeting the universally agreed target to limit global warming to 1.5 degrees Celsius. However, traditional economic advisors believe this is not sustainable and will cost the economy a great deal.

Indeed, social distancing and lockdowns have had huge cost on the world economy. Some major economies are forecasted to experience the deepest recession in their history. To mitigate this, many governments have unleashed one of their most potent tools, fiscal policy, to rescue the economy and protect jobs. For example, the United States is spending $US 2.3 trillion (11 percent of its GDP) to protect businesses.

Fiscal allocations of such epic proportions could be utilised effectively to incentivise and stimulate the transition from ‘brown’ to ‘green’ economies. We believe fiscal incentives could be provided to encourage businesses to abandon their environmentally harmful practices and boost green innovations. Stimulus and rescue packages should target cleaner industries, such as renewable energy providers, sustainable modes of transport, and carbon-neutral businesses.

In other words, governments should stipulate ‘green conditionality’ which requires businesses to demonstrate how their activities could contribute to meet national and global emission and biodiversity targets and ambitions. Taxpayers deserve responsible and transparent fiscal management. This is perhaps once in a lifetime opportunity for global leaders to bring their efforts together to reset our economies sustainably and more cleanly.

Advancing global solidarity

As two individuals who believe in the importance of multilateralism, in a period when it’s being questioned, it’s with a heavy heart that we admit the lack of coordinated global leadership to tackle a problem of this magnitude is shocking, and let’s face it – disappointing. A global crisis of such an unimaginable scale needs global action. Wealthy countries must not turn inwards as they weather the crisis. It’s in everyone’s interest that all nations come together and bolster their commitment to international development cooperation to protect the most vulnerable sections of our societies.

Building a better world will require all us to be ‘empathetic, inventive, passionate, and above all, cooperative.’ An effective partnership needs the recognition that global problems require every country’s involvement.

Business as usual, after the pandemic is contained, isn’t an option. It’s more than a health problem and the impacts won’t disappear sooner once a vaccine has been rolled out. People will increasingly question the endless pursuit of economic growth if few members of society are getting richer and others are working harder and harder just to maintain their living standard. Should recovery efforts just reward shareholders through stock-buyback schemes, frustration could lead to increased migration or societal fragmentation. It’s also possible to see a new wave of populism, born out of COVID-induced economic inequities.

As Yuval Harari put it nicely, ‘this storm will pass. But the choices we make now could change our lives for years to come’.

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Dr. Essam Yassin Mohammed is Head of Inclusive Blue Economy with the International Institute for Environment and Development (IIED). Prior to IIED he was former Head of Fisheries Promotion Unit at the Ministry of Fisheries of Eritrea. In addition to his academic and professional experience as fisheries scientist, he is an expert in economic valuation of the environment. In his capacity as Head of Inclusive Blue Economy, he works on a wide range of topics from economic valuation of environmental goods and services and fiscal reforms to connectivity between high seas and territorial waters and influencing policy processes to promote fair, inclusive and sustainable economies both at national and global levels. Essam has more than 18 years of international, multi-country experience in Sub-Saharan Africa, (South, South East, and East) Asia, Latin America and Europe. He has advised many governments including (and not limited to): Bangladesh, Brazil, Costa Rica, Cambodia, Mozambique, Tanzania, Myanmar, Vietnam, Albania, Egypt, and Lebanon.
Programme Manager, East Europe, South Caucuses, & Western Balkans; Senior Advisor, Sustainable & Inclusive Economies