Displaying items by tag: COVID19

The 35-day lockdown period to curb the spread of the Covid-19 coronavirus, will have a major impact on the 525,000 small, medium and micro-sized enterprises (SMMEs) in South Africa, putting 6.6 million jobs at risk.

This is according to Adrian Gore, a member of the CEO Initiative, chairman of the SA SME Fund, and chief executive officer of Discovery, who said: “Given the lockdown, the vast majority are unable to pay their rent, utilities, and importantly, their employees.

“Initial surveys indicate that 60% of SMEs are either considering retrenching employees, or already have. This is a significant threat to the SA economy, with many millions of jobs at risk.”

The CEO Initiative, which was established in 2016 as a collaboration between government and business to address some of the most pressing challenges to the country’s economic growth, is supporting the call of Business for SA (BSA) for all large companies to pay their SME creditors by Monday 20 April 2020.

Sim Tshabalala, a member of the CEO Initiative, and chief executive officer of Standard Bank, said: “These are extraordinary times that require extraordinary commitment from CEOs and large corporates. The Government has asked South Africans to stay home under a 35-day lockdown. This is tough for every individual, and every business, but most especially difficult for small and
medium enterprises.”

“They are under enormous strain and we are already seeing many businesses having to close their doors, which has a significant impact on their ability to sustain their employees.

“Even outside of the lockdown, many of these businesses often do not have the cash flow needed in order to maintain sustainability. We believe early payment is the right thing to do and will have a significant impact on their ability to survive and keep paying their employees.”

University of Stellenbosch Business School (USB) visiting lecturer in corporate finance, Brett Hamilton, said the Covid-19 pandemic will lead to business failures, with the SA Reserve Bank estimating an additional 1,600 business insolvencies this year, while the “fattest” – those with the strongest cash reserves – will likely survive.

“We find ourselves in one of the most uncertain periods of human history. It is blurring the lines between business, government and society. Policymakers are confronted with an unprecedented, and impossible, trade-off between public health and economic growth.

“Given the speed and uncertainty under which these complex decisions are made, we have seen unprecedented actions from governments, central banks and businesses. In many cases, governments have overstepped their usual political and ideological boundaries and business has somewhat embraced stakeholders over shareholders.

“Fighting the spread of the coronavirus requires ‘big government’ and ‘business with a heart’ to work together – it may be expected and the right thing to do in a crisis, but the question is if these roles will remain after the pandemic,” he said.

Hamilton, a director at First River Capital, said cashflow is “the lifeblood of any organisation” but lockdown has severely restricted businesses’ ability to generate cash through operations, while accessing cash through debt or equity investment are limited in the current economic climate, and possibly unwise.

The latest downgrade by Moody’s of South Africa’s credit rating to sub-investment grade severely restricts the country’s access to debt and has seen a spike in the cost of debt, he said, noting that the South African 10-year government bond yield reached a maximum of 12.36% on 24 March compared with a low of 7.9% in 2018.

“So, debt may do more harm than good during these times, even with the debt relief pledges made by banks,” he said.

This leaves “Alpha companies” – large, mature and cash-flush – in prime position to weather the storm, buy out their competitors and continue to invest for growth after the pandemic, he said.

“Markets will become more concentrated and the position of incumbents more entrenched. The business world will look different after the pandemic and it will most likely fall on governments to regulate the new ‘Alphas’ to ensure better competition.

“If it should do so and how it should be achieved remains to be seen,” he said.

Hamilton noted that during the pandemic we have seen many companies shift to a more socialist stance, offering free products, expertise and financial aid to their employees and to other virus-related efforts.

Is this perhaps the dawn of a new social contract?

Hamilton pointed to a 2017 report funded by the South Africa Department of Trade and Industry and published by the University of Johannesburg’s Centre for Competition, Regulation and Economic Development which held that South African companies were accumulating reserves as opposed to investing it in the economy and, thus, stimulating economic growth.

The report noted that between 2005 and 2016, the cash reserves of the top 50 companies on the JSE increased from R242 billion to R1.4 trillion and called for policy intervention from government to stimulate domestic investment by these companies and put an end to the “investment strike”.

He said that while there were counter-arguments to this – that “cash hoarding” was a myth and merely a reflection of the business environment at the time – if government policy had been used then to force South African companies to spend their cash holdings, fewer would now be in a position to weather the current storm.

“This could support the view for lower government involvement in business and the protection of the free market. That being said, government intervention during the pandemic has not only been welcomed by many, but in most cases has been expected.

“Similar to the financial crisis of 2008/9, governments have moved to act to protect the free market, but in many countries the interventions for the coronavirus have been more radical.

“Putting a freeze on the free market by way of lockdown is counter to the political and economic ideologies of many countries, but they have acted nonetheless,” he said.

Hamilton said that government intervention should also focus on the ability of the economy to recover after lockdown has lifted – “to ensure that enough businesses remain standing and that people are employed through the crisis to quicken the pace of recovery after the pandemic”.

“What is required is the ability for companies to maintain payroll, gain access to debt financing and for central banks to provide the latitude for banks to reschedule loans (possibly with forbearance through credit guarantees).

For this, governments must pull out all stops in terms of fiscal action,” Hamilton said.

With South Africa’s “limited fiscal latitude”, external finance would be required and should be accessed from as many sources as possible, including bonds, accessing the capital market, as well as a reliance on development banks such as the IMF.

 

Culled from 

Published in Business

The global economic costs of the COVID-19 pandemic will be massive, with the International Monetary Fund forecasting the worst global recession since the 1929 Great Depression. In Africa, the epidemic is gaining momentum. The continent is bracing itself for an unprecedented sanitary and economic crisis.

The World Bank estimates that the continent’s pace of economic growth may drop from 2.4% in 2019 to -2.1% to -5.1% in 2020, the first recession in 25 years. The continent could face a balance of payments shortfall in excess of $100 billion in 2020. A balance of payments records a nation’s transactions with the rest of the world. These transactions include imports and exports as well as capital inflows and outflows.

The nations at the centre of the pandemic – China, the UK, continental Europe and the US – are grappling with both supply and demand shocks. These are Africa’s major trading partners. Countries in sub-Saharan Africa are therefore seeing a huge drop in demand for their primary commodities. Their manufacturing and tourism industries have also seen substantial disruptions due to restrictions on the transportation of goods and people.

Many African countries are dependent on food and pharmaceutical imports. Some also rely on overseas remittances and tourism for foreign exchange earnings. This means more hardship is yet to come.

Mauritius has not been spared from COVID-19. The country has been under national confinement since 20 March, a curfew since 24 March. As it is a globally interdependent economy, the impact on the country has been unparalleled. The first estimates point to a GDP contraction of 3% to 6% in 2020. The crisis is expected to spread well into 2021. Government has committed close to Rs.12 billion (US$300 million) worth of measures in support of businesses and workers. A further fiscal stimulus will be necessary to weather the storm.

But Mauritius heads into the epidemic on a stronger footing than many sub-Saharan Africa countries. The country’s solid social protection system provides a strong foundation which government can use to expand support to the most vulnerable Mauritian households.

Stronger welfare buffers

Mauritius had a strong Fabian socialist inspired leadership at independence. It is therefore one of the few countries that successfully preserved its welfare state throughout its stabilisation and structural adjustments programmes in the 1980s. Today the country boasts a social protection system that is broad and relatively extensive in coverage.

Mauritius’ entrenched social protection culture meant that government promptly acted to minimise job losses from the 2008 global financial crisis. Its welfare system enabled timely policy responses, helping minimise the socio-economic impact of the crisis.

Mauritians benefit from universal and free health coverage, free education from the age of five, free higher education, an unemployment benefit scheme that embeds provisions for informal labour, a minimum wage (US$258 per month), a 13th month salary, a range of social assistance schemes for the most vulnerable and a universal pension scheme (US$228 per month).

The latest available data shows that Mauritius allocated 9.3% of its GDP to social protection measures. The average across sub-Saharan Africa is 4.5%. Only South Africa, Botswana, Djibouti and Lesotho spent more than 6% of GDP on social protection.

With 3.4 hospital beds per 1,000 population, Mauritius is better equipped than the UK (2.8 beds per 1,000 population) and this contrasts with the sub-Saharan Africa average of 1.2 beds per 1,000 population. The fight against Ebola and HIV/AIDS enabled some countries to accumulate valuable expertise in containing the spread of contagious diseases. Nevertheless most health systems in sub-Saharan Africa remain deeply fragile and massively underfunded.

Primary commodity exporters with limited social protection and limited cash transfer programmes in central and western Africa will probably be the hardest hit. With limited fiscal space they will urgently require international funding and support in implementing immediate COVID-19 targeted solutions.

With the pandemic still unfolding, African finance ministers have called for international fiscal support and a coordinated policy response to address the sanitary and economic impacts.

Calls for reform

There is debate as to whether the Mauritian welfare state should have undergone more fundamental reform in terms of quality of delivery, especially in the areas of health and education. The government’s vision of becoming a high-income economy by 2030 may have obstructed the need to focus on sustainable outcomes rather than quantitatively measurable growth objectives. These concerns are legitimate and will need to be addressed.

But for now, Mauritius can count on its existing welfare system as it crosses the coronavirus desert. As it battles the health and economic impacts of the pandemic:

  • the sick will be systematically treated for free, irrespective of socio-economic class, by the national health care system;

  • the unemployed will receive unemployment benefits for up to a year;

  • pensioners will receive a guaranteed income through the universal pension; and

  • fiscal stimulus measures will be manageable and easier to implement given the systems and institutions already in place.

Post-COVID-19

Will the welfare state be enough to save Mauritius from increased inequality post-COVID-19?

Probably not. But it will help save lives across social classes and will cushion the social impact for the most vulnerable, with obvious knock-on effects for social cohesion and the local economy. All else being equal, it also means Mauritius will require less incremental spending per head for an equivalent health and economic impact, compared to countries with less social protection.

What the Mauritius experience indicates is that an economic policy anchored on capital accumulation and growth alone cannot protect people from the impact of global exogenous shocks. What’s needed is systemic social protection that reaches the most vulnerable.

As countries rebuild their economies post COVID-19, they will need to ensure that social welfare lies at the heart of their strategies. Each country will need to find the social protection system that suits its specific situation.

The prevalence of self-employment and informal economic activity in some countries might call for welfare solutions that are flexible and agile. Technology and artificial intelligence could be useful tools to allow welfare to reach the most vulnerable, in the same way that mobile banking enabled wider access to basic financial services.

Countries will need more fiscal space and transparency. But whatever reconstruction plan is in place, universal access to quality health care and education must be at the heart of any strategy.The Conversation

 

Myriam Blin, Head of the Leadership Centre, Charles Telfair Campus, Charles Telfair Campus

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Published in Travel & Tourism

More than half of all African countries have now imposed lockdown measures aimed at flattening the curve of new COVID-19 infections.

The reason for taking such drastic measures while infection rates are still relatively low, compared to the rest of the world, is that they could help Africa prevent the pandemic from making an even greater impact.

Some of the lockdown measures are even more stringent than those in many developed countries. These measures are already having a negative economic impact, particularly on urban populations.

People operating in the informal economy, who make a living based on daily transactions, are the hardest hit. Unlike many developed countries, Africa is largely urbanising without commensurate industrialisation. Formal job growth lags far behind. The urban informal economy is the main generator of income. It accounts for almost 72% of non-agricultural employment across the continent.

Urban dwellers use a major portion of their daily income on food. This is because they are less likely than rural people to be able to grow their own food. The poorest urban dwellers can spend up to 60% of their income on food.

The Nobel prize winning economist Amartya Sen famously observed that hunger is usually not a result of an insufficient supply of food, but rather a result of political constructs that result in those most vulnerable not being able to access the right foods. For the poorest urban dwellers this vulnerability is aggravated when their incomes fall at the same time as food prices rise – a situation already happening in developing country cities facing lockdowns.

Governments must therefore focus on keeping food supply chains working. This will require a combination of interventions. The first is to ensure that sufficient food reaches urban markets and that it remains affordable. They will also need to ensure that food can be accessed by those who need it most and in such a way that continues to ensure the health and safety of everyone.

Keeping food supply chains going

Prior to the COVID-19 crisis, food in African cities was already expensive. Urban populations pay about 35% more for food than people pay elsewhere. One of the drivers is the sprawling and fragmented form of many African cities, due to poor planning. This increases the costs of land, rent and transport. It translates into higher costs throughout supply chains, including those for food.

During the COVID-19 crisis, food supply chains were initially disrupted by the closure of borders. This is a worry for low-income countries, which are much more dependent on food imports.

Next came bans on public and private transportation inside countries, threatening the supply of food to cities. The bans also threaten supply chains of imported food via cities to rural areas.

Many countries, like Kenya, are exempting official food supply shipments from these bans. But food that supplies markets in African cities is often transported informally and in small quantities. More importantly, it is transported through the same public system that has now been temporarily shut down in many places.

In some countries, prices for some food products rose by more than 100% at the start of national lockdowns, driven by panic and uncertainty. India’s case shows that disruptions in the food supply chain will result in higher food prices, hitting the urban poor the hardest.

Food aid is only a temporary stop gap

Some African countries are distributing food aid as a stopgap. Rwanda was one of the first. Uganda has followed, undertaking food distributions for 1.5 million vulnerable residents of Greater Kampala.

Distributing food aid may be complicated by the fact that it is not always clear who should be targeted. In many developing countries, vulnerability, poverty and hunger exist across the entire population. But during a crisis like COVID-19, people who rely on the market rather than growing their own food will be the most heavily affected. This is why both Rwanda and Uganda decided initially to target urban populations.

Even within cities, understanding who to target is difficult.

In more developed countries, comprehensive tax and employment registers make it easier to identify vulnerable populations. Without comprehensive registers, it may be logistically easier to get people to come to a central area to receive food if they need it. But not only does this undermine social distancing, having large numbers of desperate people in one place can bring about chaos.

Food aid may prove unsustainable. It’s not yet clear how long lockdowns will need to last to flatten the curve sufficiently. And an effective vaccine is at least 18 months away. Yet the longer the lockdowns last, the more people may be pushed into poverty. More people will need food aid and for longer. Many African governments are already cash strapped and so free food distribution cannot be a long term strategy.

That’s why ensuring stable access to affordable food is key.

Managing informal markets

Many African cities are sprawling due to their largely unplanned growth. As people flock to cities, they tend to live first on the outskirts where it is more affordable. Markets and individual vendors set up there to serve the informal settlements. These are important sources of food security for urban households. Because they are close to where people live, they enable daily purchases, particularly of fresh produce. Informal sector operators survive from income earned daily.

This decentralised food vending is often less tolerated by governments. But it may actually prove to be an advantage. It means people don’t need to go far from home for food. It also may be easier to prevent crowds of people forming and more feasible than enforcing strict distancing measures in market spaces. What’s more, these informal vendors, many of whom are women, are often the most economically vulnerable, so they need to be able to continue to sell.

Where there are larger markets, measures that allow them to operate safely will be key. This is for non-food items too, to allow people to generate income to purchase food. Measures will need to include effective sanitation and hand-washing stations. Targeting individual behaviour may also be highly effective.

Many of these markets already tend to be more organised, so it may be easier to work with them to implement measures. For example, vendors could work in rotation to decongest markets on any one day. This has already been done with some success in some places in India.

To avoid a hunger crisis, governments must think of sustainable solutions to keep food supply chains working. The COVID-19 crisis may last for many more months.The Conversation

 

Astrid R.N. Haas, Policy Director, International Growth Centre

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Published in Opinion & Analysis
Thursday, 16 April 2020 15:07

Zimbabwe: Cash Transfers Begin

Zimbabwe's Government has started disbursing money to vulnerable groups that were affected by the 21-day lockdown, with the first beneficiaries in Harare and Bulawayo receiving their payouts yesterday.

The Ministry of Women's Affairs and Small and Medium Enterprise Development has availed a database of 129 000 SMEs to be considered for the Government bailout.

This was said by Public Service, Labour and Social Welfare Minister Professor Paul Mavima during yesterday's post Cabinet briefing.

"We have other databases of those who are marginally food insecure with almost 3,5 million people, but we have to look at the neediest out of those so that we can reach the one million whom we have budgeted for and the disbursement are already underway," he said.

In a separate interview, Prof Mavima's deputy, Lovemore Matuke said payouts for beneficiaries from other provinces will be ready by tomorrow.

Government has availed $600 million through Treasury to cushion vulnerable households whose sources of income were largely affected by the 21-day national lockdown aimed at curbing the spread of Covid-19, while a separate package was being worked on to cushion SMEs and vendors.

Finance and Economic Development Minister Professor Mthuli Ncube announced the facility two weeks ago.

Government said it would ensure the beneficiaries were not charged transactional costs when cashing out.

It recently said it would continue to implement selected priority programmes and projects to sustain the economy, but more resources would be channelled towards saving lives.

Further, the two percent intermediated money transfer tax (IMTT), which is ring-fenced for social protection and capital development projects, will be channelled towards Covid-19 related mitigatory expenditures.

Government has also availed a number of tax incentives for production and importation of essential drugs and health related capital equipment, as well as other medical supplies.

Treasury has suspended duty and tax on various goods and services related to testing, protection, sterilisation and other medical consumables to boost the country's state of preparedness against Covid-19.

 

Source: The Herald

Published in Economy

The COVID-19 pandemic, one of the world’s most significant events, has resulted in cessation of economic activities that will lead to a significant decline in GDP, an unprecedented social disruption, and the loss of millions of jobs.

According to estimates by the African Development Bank, the contraction of the region’s economies will cost Sub-Saharan Africa between $35 billion and $100 billion due to an output decline and a steep fall in commodity prices, especially the crash of oil prices.

More fundamentally, the pandemic has brutally exposed the hollowness of African economies on two fronts: the fragility and weakness of Africa’s health and pharmaceutical sectors and the lack of industrial capabilities. The two are complementary.

This is because Africa is almost 100 percent dependent on imports for the supply of medicines.

According to a recent McKinsey (2019) study, China and India supply 70 percent of Sub-Saharan Africa’s demand for medicine, worth $14 billion. China’s and India’s markets are worth $120 billion and $33 billion respectively. Consider a hypothetic situation where both India and China are unable or unwilling to supply the African market? Africa surely faces a health hazard.

The root of Africa’s underdeveloped industrial and health sectors can be encapsulated in three ways. First, some African policy makers simply think that poor countries do not need to industrialize. This group believes the “no-industrial policy” advocates who engage in rhetoric that does not fit the facts. The histories of both Western societies, and contemporary lessons from East Asia, run contrary to that stance.

Clearly, governments have an important role to play in the nature and direction of industrialization. Progressive governments throughout history understand that the faster the rate of growth in manufacturing, the faster the growth of Gross Domestic Product (GDP).

From the Economist magazine five years ago: “BY MAKING things and selling them to foreigners, China has transformed itself—and the world economy with it. In 1990 it produced less than 3% of global manufacturing output by value; its share now is nearly a quarter. China produces about 80% of the world’s air-conditioners, 70% of its mobile phones and 60% of its shoes. Today, China is the world’s leader in manufacturing and produces almost half of the world’s steel.” The keyword is “making”.

Two, rich countries therefore became rich by manufacturing and exporting to others, including high-quality goods and services. Poor African countries remain poor because they continue to produce raw materials for rich countries. For example, 70% of global trade in agriculture is in semi-processed and processed products. Africa is largely absent in this market while the region remains an exporter of raw materials to Asia and the West.

Lastly, African countries are repeatedly told that they cannot compete based on scale economy, and as well, price and quality competitiveness because China will outcompete them. For this reason, they should jettison the idea of local production of drugs, food and the most basic things.

The question is: How did Vietnam, with a population of 95 million, emerge from a brutal 20-year war and lift more than 45 million people out of poverty between 2002 and 2018 and develop a manufacturing base that spans textiles, agriculture, furniture, plastics, paper, tourism and telecommunications? It has emerged as a manufacturing powerhouse, becoming the world’s third-largest exporter of textiles and garments (after China and Bangladesh).

Vietnam currently exports over 10 million tonnes of rice, coming third after India and China.

How is it that Bangladesh, a country far poorer than many African countries, is able to manufacture 97% of all its drugs demand, yet it is next door to India, a powerhouse of drug manufacturing?

The COVID-19 pandemic has exposed Africa. African leaders need to look in the mirror and ask where this continent will be in 2030 and 2063. Africa must adopt progressive industrial policies that create inclusive, prosperous and sustainable societies.

What then should be done? A three-pronged approached is urgently needed.

First, Africa needs a strong regional coordination mechanism to consolidate small uncompetitive firms operating in small atomistic market structures. With a consumer base of 1.3 billion and $3.3 trillion market under the African Continental Free Trade Area (AfCFTA), the continent has no choice but to bring together its fragmented markets.

Second, Africa needs to build better institutions, strengthen weak ones and introduce the ones missing. No better wake-up call is required than the present pandemic.

Third, one important institution that has been abruptly disrupted is the supply chain for medicines and food, for example. Logistics for transporting capital and consumer goods across the region need predictable structures. Building or strengthening supply chains involve fostering and providing regulations for long-term agreements and competences that leverage both private and public institutional challenges such as customs regulations.

Finally, development finance institutions (DFIs) such as the African Development Bank are mandated to, and are currently, trying to fill the gaps left by private financial institutions. There is an opportunity to Africa to rethink and reengineer its future. The Africa of tomorrow must look inwards for its solutions. - whether in feeding its own people, build industrial powerhouses led by African champions.

The African Development Bank stands ready to help target and push for deeper economic transformation. Africa needs to execute structurally transformative projects that generate positive externalities and social returns. Keep our eyes on the days after.

Professor Banji Oyelaran-Oyeyinka, is the Senior Special Adviser on Industrialization to the President of the African Development Bank. He is a fellow of the Nigerian Academy of Engineering and Professorial Fellow, United Nations University. His recent book is “Resurgent Africa: Structural Transformation and Sustainable Development”, UK: Anthem Press, 2020.

Published in Opinion & Analysis

The COVID-19 pandemic has left Zimbabwe in an extremely difficult situation. As of early April, the number of infections and deaths from the pandemic appeared low, although the available data isn’t necessarily reliable.

President Emmerson Mnangagwa announced a 21-day lockdown which began on 30 March, in a bid to contain the spread of the coronavirus. The decree ordered all citizens to stay at home, “except in respect of essential movements related to seeking health services, the purchase of food”, or carrying out responsibilities that are in the critical services sectors.

Other measures include the shutting down of public markets in the informal sector, except those that sell food.

None of this will be easy to implement in Zimbabwe.

The country has an economic profile similar to that of many developing countries. The difference is that its informal sector makes up a much higher percentage of the overall economy. According to a 2018 International Monetary Fund report, Zimbabwe’s informal economy is the largest in Africa, and second only to Bolivia in the world. The sector accounts for at least 60% of all of Zimbabwe’s economic activity.

In addition to the usual problems faced by countries with large informal economies, including poor governance and low tax revenues, Zimbabwe has an added set of problems: its economy is broken.

To implement the nationwide lockdown Mnangagwa is likely to have to inflict further damage to an already extremely fragile economy.

The president did not announce a stimulus financial package to cushion business from the impact of the lockdown. This might result in the total collapse of some businesses.

Fragile economy

Zimbabwe’s economy has been shrinking since 2000, triggered by the government’s controversial land re-distribution programme of that year. The violent programme wreaked havoc on agriculture, which was then the mainstay of the Zimbabwean economy.

This was compounded by subsequent sanctions imposed by the West in response to the seizures of white-owned farms and land.

Around 6 million Zimbabweans – about 34% of the population – live in extreme poverty.

The IMF recently gave a very bleak assessment, saying that the country’s economy had contracted by 7.5% in 2019. It put the inflation rate at over 500%, meaning that the country was heading back to the traumatic hyper-inflation era of 2007/8, when inflation peaked at an official 231 million percent.

The IMF report shows that Zimbabwe’s economy performed the worst in sub-Saharan Africa in 2019. Its prognosis is disheartening, showing that if

…governance, and corruption challenges, entrenched vested interests, and enforcement of the rule of law, (were not observed) then…there is little prospect of a major improvement to Zimbabwe’s economic and financial challenges in the short to medium term ….

The dire economic situation is further worsened by the fact that the country is suffering its worst hunger crisis in a decade, largely due to an ongoing drought that started last year. The shortage of essential foods, such as the staple maize meal, often results in stampedes at the few markets where they can still be found.

Zimbabwe’s informal sector

Two decades of economic turmoil have seen Zimbabwe’s formal economic sector shrinking significantly. For example, manufacturing, clothing and textile industries have almost totally collapsed, with factories reduced to dilapidated shells.

The consequence is that the informal sector has grown exponentially. It’s estimated that a staggering 90% of Zimbabwe’s working population is employed in this sector.

I have been doing research on Zimbabwe’s informal sector for the last 12 years. I have found that it sustains many families’ livelihoods, even though the majority of participants in the sector live from hand to mouth as petty traders. This reality that confronts Zimbabwe’s informal economy is corroborated by research by the Labour and Economic Development Research Institute of Zimbabwe.

In addition, almost everyone who is employed in the formal economy augments their income through informal sector activities such as cross-border trading.

Reliable numbers are hard to come by, but a very high number of Zimbabweans eke out a living in this sector, or rely on it for food, clothing, fuel, local currency and forex.

Stern test

The lockdown in Zimbabwe is going to provide a stern test for its informal economy, which is the country’s dominant economy. Most traders are subsistence traders and are already mired in extreme poverty. The jury is out on the extent to which they will observe the lockdown.

The government should immediately put in place a stimulus package that can cushion the informal economy.

Otherwise, a lot of livelihoods are going to be destroyed. The ramifications for the country and the whole region, especially neighbouring South Africa, will be grim.


Read more: Zimbabwe’s deepening crisis: time for second government of national unity? The Conversation


Tapiwa Chagonda, Associate Professor of Sociology, University of Johannesburg

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Published in Economy

The lockdown that countries all over the world are currently experiencing is putting a renewed focus on personal hygiene. But despite people being advised to wash their hands often, how many apply the same rigour to their smartphones? Kaspersky provides a few tips on keeping mobile devices ‘virus-free’.

“Even before the COVID-19 pandemic, it is frightening to think how much bacteria lives on our personal mobile devices. And with the Coronavirus able to survive at room temperature and remain infectious on metal, glass, ceramic, and plastic for several days, it becomes essential to follow effective disinfection protocol,” says Maher Yamout, Senior Security Researcher for the Global Research and Analysis Team at Kaspersky.

The virus can get onto a phone or tablet in two ways: either in tiny droplets when an infected person coughs nearby, or from your own hands after touching door handles, ATM buttons, and the like.

Fortunately, unless a person hands their mobile device to someone who is infected to cough and splutter all over it, the probability of infection by airborne route is low. Transmission by hand depends on the duration of contact and varies for different microorganisms. But with no reliable data for COVID-19 available yet, it is always best to be extra cautious.

“If you must go to the shop for essential goods, it is imperative to disinfect your phone when you return home. There are several common household products that can deal with the Coronavirus effectively - ethanol (C2H5OH), isopropyl alcohol (C3H7OH), hydrogen peroxide (H2O2), and sodium hypochlorite (NaClO),” adds Yamout.

Isopropyl alcohol is considered the least harmful to the oleophobic coating that allows fingers to slide over the screen without covering it in fingerprints. So, use it if you can (as spray or wet wipes).

Ethanol and hydrogen peroxide should be considered a backup if nothing else is available. With frequent use, these products can easily ruin the oleophobic coating. Even once might be enough, it depends on the coating.

As for concentration, the optimal to go for is approximately 70-80%. Purer alcohol evaporates too quickly for best results. The disinfecting solution must sit on the surface for about a minute. A lower concentration is less efficient in killing viruses.

People should therefore not rely on vodka for example instead of ethyl alcohol. Even glass cleaner is not as effective as isopropyl alcohol given it has a considerably lower alcohol content. It is also critical to not pour the disinfectant into the connectors, speakers, and other openings in the smartphone, even if it is waterproof. Rather, take a cotton pad, soak it in the liquid, and apply it to all sides of the device. There is no need to press hard, just carefully and thoroughly wipe the whole surface.

People should apply the same disinfection regiment to any other gadgets they use in public places. These can include tablets, laptops, smartwatches, bracelets, headphones, and so on. However, always check the product Website whether the manufacturer has any recommendations as to which substances are best suited for the device cleaning and how to apply them.

Published in Telecoms

Employers, now more than ever, need to provide access to independent financial advice to their employees, says the boss of deVere Group.

The observation from Nigel Green, the chief executive and founder of one of the world’s largest independent financial advisory and services companies, comes as firms and staff seek to readjust their financial strategies due to the coronavirus pandemic.

Mr Green says: “There is enormous global progress being made in the public health fight against coronavirus, and the economic fallout from it, thanks to the commitment of individuals, organizations, businesses, central banks and governments, amongst others.

“However, the pandemic has had immediate, dramatic and far-reaching effects on business activity.

“And the true depth of the dislocation still remains to be seen.

“Of course, a recovery will come, perhaps even comparatively quickly. But the world of work has changed – as it always does in serious economic downturns.”

The message from the deVere CEO comes as firms are desperately trying to minimise redundancies and deal with supply and/or demand issues, many people have been furloughed, and many are deeply concerned about their financial security.

He continues: “Despite – or indeed because of – the considerable challenges they are currently faced with, in this shifting and disruptive environment, employers should seek to give employees access to impartial, financial advice. 

“This access would benefit the employers, the employees, and broader society and economy.”

Mr Green goes on to say: “Incorporating a financial adviser into an employee’s benefits program doesn’t need to be an extra cost or a difficult undertaking for an employer.  

“These advice sessions are typically offered completely free of charge, both for the company and for the employee.

“By upgrading and boosting their employees’ benefits programs, employers will be able to attract and retain top talent during the recovery and beyond, which is likely to be critical to their success.

“In addition, this crisis has underscored that increasingly companies will only survive and thrive if they operate with a nod from the wider court of public approval.”

He adds: “When employees are aware and in control of their personal finances, they’re on track to reach their long-term financial goals, typically in terms of their children's education, protecting their assets, or preparing for their own retirement.

“In turn, this makes them happier, less stressed, more focused, more productive and more engaged with their employer.”

Nigel Green concludes: “We need a ‘joined-up thinking’ approach to financial advice. 

“It’s in everyone’s interests that the workforce is as financially secure as possible. 

“The cost of having an increasingly large section of the population being financially dependent on the State is damaging to individuals, families and society and it will significantly impede sustainable, long-term economic growth.

“Now is the time for employers to actively engage with the financial advisory industry.”

Published in Bank & Finance

The spread of COVID-19 has been slow in Nigeria compared to other countries on the continent. Nevertheless, the federal government has taken steps in readiness for a more rapid outbreak. Schools have been closed, public gatherings banned by some state governments and most public workers are required to work from home.

An international travel ban has also been imposed and the country has announced a lockdown of major cities.

Nigeria’s health system will find a full onslaught of COVID-19 difficult to handle. The main reasons are its lack of sufficient isolation centres and testing kits.

The other major challenge is that Nigeria has a very high dependency on imported drugs – 70% are brought in from abroad, chiefly China and India. On top of this, Nigeria relies on imported active pharmaceutical ingredients as well as equipment used in drug manufacturing.

This dependency is of particular concern in the face of a threat such as COVID-19. The reliance on foreign countries may lead to a serious medical crisis in the country if it is unable to source the drugs it needs. China and India have both been hit hard by the pandemic.

It’s important for Nigeria to take stock. It needs to look at lessons learned and build on them to respond better to ensure uninterrupted pharmaceutical supply during pandemics.

Drug security is important

With the numerous health challenges that Nigeria faces – ranging from communicable to non-communicable diseases – pharmacotherapy is the mainstay for vast majority of conditions. Ensuring national sufficiency and drug security is crucial in tackling diseases, reducing mortality and catering for other health care needs.

This no mean task with a growing population of over 200 million. It is important at the same time to combat falsified, substandard and counterfeit pharmaceutical products. All pose threat to the economy and security of the nation.

There are steps the country can take to offset the very high dependency on imports. Manufacturing is one such route.

The manufacture of drugs in Nigeria is on the decline. The main reasons for this are infrastructural challenges – like a lack of consistent energy supply – as well as inadequate financial support to the up-and-coming pharmaceutical scientists.

Others constraints include difficulties in the over-dependence of imported raw materials, weak technology and engineering base, weak industrial linkages and supply chain with high taxation.

Nigeria nevertheless has a relatively sizeable industry. The country is home to more than 115 pharmaceutical companies. These produce for the local markets and for export to neighbouring countries.

Nearly all of the local drug manufacturers purchase active pharmaceutical ingredients from other manufacturers and formulate them into finished drugs. This means that they are limited to purchasing drugs and repackaging them for use.

There is, however, some manufacturing. This includes analgesics, antimalarials, antibiotics, antiretrovirals and vitamins including tablets, capsules and syrups. Others include antitussive syrups, infusions, antacids, antiseptics/disinfectants and injectables.

But there is no significant research and development activity in the country. And most of the pharmaceutical companies in Nigeria have not been able to fully navigate the challenges which makes the operation in the country sub-optimal.

The overall impact of this pandemic may be felt soon, leading to shortages of active pharmaceutical ingredients. This should raise concern about the potential of an increase in fake and counterfeit medicines and drugs. Fighting the sale of fake, counterfeited and sub-standard drugs is a ongoing struggle in the country.

Opportunities

The COVID-19 pandemic should be an opportunity for drug manufacturers to pressure government into doubling efforts to ensure local drug manufacturing.

The federal ministry of health too needs to ensure that the medicines and drugs supply chains are well-coordinated and regulated to ensure that people who need them have access. It should ensure that all drugs listed on the national essential drug lists are readily available and well distributed across the country.

Nigeria is blessed with thousands of medicinal herbs. This is equally an opportunity for the country to strategically improve its research on herbal medicines for diseases management and improve access to medicines.

Developing a sustainable and efficient local drug industry in Nigeria would take decades of dedication by both the private sector and government. It is therefore important for the government to make the country attractive for foreign pharmaceutical companies and also to complement the development of drug manufacturing.

The National Agency for Food and Drug Administration and Control and Pharmacists Council of Nigeria have been making meaningful efforts to ensure and encourage local drug production. Both organisations should do more especially in getting government’s political commitment to encourage local drug manufacturing.

The food and drug agency recently ordered manufacturing of chloroquine for emergency stock for possible clinical trial for COVID-19 treatment.

Interestingly, the federal government has directed the National Institute for Pharmaceutical Research and Development to start research on herbal drugs that will help combat COVID-19.

The challenges facing local drug manufacturing in the country cannot be completely solved during this pandemic. However, it should provide the opportunity for reflection as regards drug security during pandemic.The Conversation

 

Wuraola Akande-Sholabi, Lecturer 1, University of Ibadan

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Published in Economy

African governments set to see decline in revenues; Exploration projects put on hold; Thousands of local jobs at risk if nothing is done.

While the short-term effects of Covid-19 on world economies are already being felt and put millions in a situation of economic distress, their long-term ones are yet to be fully grasped. In sub-Saharan Africa, the impact will be felt even stronger because the pandemic is being combined with a historic crash in oil prices, putting pressure on state budgets and testing the resilience of the continent’s strongest energy companies.

The immediate effect of Covid-19 for the sector has been on the demand for crude oil, and on its prices. Most analysts and operators now agree that 2020 could see a negative demand growth for oil globally as industries shut down and countries around the world go on lock down. The effect on prices has been nothing short of devastating: they have reached their lowest levels since 1991 and currently stand at below $25 a barrel.

For Africa, this means an immediate pressure on state budgets and macro-economic stability. Apart from South Africa, the continent’s biggest economies rely heavily on oil revenue to fuel state budget and public spending and ensure macro-economic stability. All sub-Saharan Africa’s producers had budgeted 2020 with an oil benchmark well above $50, from $51 in Equatorial Guinea all the way up to $57 in Nigeria. With predictions that oil prices won’t go anywhere above $30 for the rest of the year, most budgets need to be re-adjusted and public spending needs to be drastically cut.

According to the Atlantic Council, major African producers could expect multi-billion dollar losses in state revenues this year. Congo-Brazzaville could take the hardest hit, with a loss representing 34% of its GPD, in a country where debt-to-GDP ratio is already around 90%. The same applies to Angola, where oil prices at $30 would generate a revenue loss of almost $13bn, or 13% of GDP.

Equatorial Guinea, Gabon and Chad could see losses of almost 10% of GDP due to the ongoing crisis. Nigeria finally would suffer the biggest lost with $15.4bn, still according to the Atlantic Council. While it would represent only 4% of its GDP, the impact on marginal producers and local jobs would potentially be devastating. Newer producers would also suffer revenue losses: in Ghana, the the Africa Centre for Energy Policy (ACEP) estimates a potential revenue loss of 53% down to $743 million instead of the $1.567bn the country expected to receive this year.

“Thousands of Africans and expats are going to be laid off in oil-producing countries as companies shut down their drilling rigs and planned projects. We need to face the reality as these times are unprecedented.

The uncertainty is even more frustrating for oil companies and the workers. Forgive me but there is blood on the streets, in the water and the air has the coronavirus,” said NJ Ayuk is Executive Chairman of the African Energy Chamber and Petroleum industry lobbyist. “Petroleum-producing countries need to come together and work with the private sector in order to get us through the COVID 19 crisis and mitigate the economic fallout as much as possible. When the US and Europe are talking about a recession, most African countries and the common man on the streets have likely already entered a depression,” added Ayuk.

The long-term effects that Covid-19 will have on the sector in Africa depends on what happens this year and in the following month. Cuts in exploration spending and cancellation of drilling plans today could potentially mean years of delay in new discoveries, reserves replacement and new fields being brought on stream.

The biggest international oil companies operating in the continent are all cutting spending by an average of 20% globally, which is set to impact exploration and projects in Africa. While ExxonMobil considers several reductions in spending, Shell has already announced a reduction of underlying operating costs by $3 to $4bn and a reduction of cash capital expenditure of $5bn. Total’s organic capex is being cut by more than $3 billion, representing 20% of its planned 2020 capex. Chevron is also reducing capital and exploratory spending by 20%, including a $700 million cut in upstream projects and exploration.

These IOCs were expected to take major final investment decisions this year or in the near future on multi-billion dollar projects in Africa. These include Shell’s Bonga South-West project, ExxonMobil’s Bosi, Owowo West and Uge-Orso projects, or Chevron’s Nsiko project. regardless of how close each of these were to FID, they are very unlikely to get sanctioned this year. Recent statements from independents are going in the same direction. Woodside Energy for instance is currently reviewing all options to preserve and enhance the value of its Sangomar Offshore Oil Project in Senegal, whose first oil was expected in 2023.

Beyond oil, natural gas and LNG projects are also already being delayed. ExxonMobil’s announcement that it would postpone the green-light on Mozambique’s multi-billion dollar Rovuma LNG project is sending worrying signals for instance. Similarly, BP and Kosmos are already working to defer the 2020 Tortue Phase 1 capital spending for their multi-billion dollar FLNG project in Mauritania and Senegal. Together, Rovuma LNG and Greater Tortue Ahmeyim represent the biggest hopes Africa had to strengthen its position as a new global LNG export hub. Delaying such projects will have significant consequences on forecasted economic growth in each country.

Finally, the long-term impact of Covid-19 is taking shape right now, as exploration programs are put on hold. Much-awaited drilling like FAR’s plans in The Gambia this year have been suspended. Other planned seismic acquisition projects have also already been cancelled, such as EMHS’ CSEM Survey offshore Senegal and Mauritania for BP which was set to begin this month, or Polarcus’ 3D seismic acquisition project offshore West Africa.

Meanwhile, most licensing rounds that were set to confirm Africa as a global exploration frontier this year will most likely not live up to expectations. South Sudan for instance has already announced the suspension of its oil & gas licensing round this year.

While African nations grapple with the crisis brought by Covid-19 and the OPEC price war between Saudi Arabia and Russia, the initiatives they take today will determine the future of their oil & gas industries for years. Local companies, be they producers or services providers, are at the frontline and need all the possible support they can get to avoid cutting jobs and survive the crisis. As Shoreline Energy CEO Kola Karim recently phrased it, “when the elephants fight, it’s the smaller producers that suffer.” Supporting these smaller producers and their local contractors should be a priority to preserve the long-term future and prosperity of Africa’s oil & gas sector.

Published in Engineering
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