Global e-Conference Side event 7 - Impacts of COVID-19 and policy responses in Africa and beyond
The COVID_19 crisis is having massive human development impacts around the world. According to FAO, even before the outbreak, more than 820 million people were suffering from hunger, while the WFP has projected that the pandemic might double the number of acutely food-insecure people globally, and the World Bank predicts a rise in extreme poverty that could wipe out the progress of the last decades.
Despite the urban focus of most containment measures, the negative impacts on rural households have been swift and severe. To mitigate them, countries have put in place a host of social protection measures. These have exposed the fragility of current systems of service provision, while opening up opportunities for more resilient systems in the future.
The need to rethink social protection and build system resilience
Even before the COVID-19 outbreak, the world was off-track to reach the 2025 nutrition and food security targets. The pandemic has since thrown the world further off the track. The reversal of economic growth is leading to a sharp increase in poverty, massive job loss in food systems (especially in segments like food processing, packaging and distribution that had predominantly hired women), and a steep rise of chronic undernourishment and income inequality. This poses a huge challenge particularly to low- and middle-income countries, which lack the resources available to wealthier countries to effectively respond to and recover from the crisis.
Informal workers will be affected most severely. Already, 3 billion people around the world lack access to healthy diets, and COVID-19 has only exacerbated the vulnerability of millions of families already living in poverty. Social protection plays a key role in protecting poor people, helping them minimise risks and increasing their adaptive capacity so that they do not fall further behind. Nonetheless, expanding the coverage or increasing the size of social cash transfers is not a permanent solution. Only few countries are increasing both the adequacy and coverage of social protection measures – not only to reach people already covered but those in the ‘new hotspots’ of food insecurity.
Most of the measures adopted in recent months have amounted to ex post responses. We need to look forward and think differently, focusing not only on how we respond to emergencies but what we can do to manage uncertainty and to anticipate, adapt to and recover from crises. Focus needs to be on:
- Making the entire system more resilient – not only households.
- Transforming the agri-food sector in ways that will improve its resilience and make it more sustainable.
- Ensuring that global value chains do not exclude people – going beyond the focus on technology and innovation and enabling better governance.
- Improving our predictive power about potential catastrophic events so as to enable early action – by gathering and utilising ‘big data’.
Simulating the impacts of COVID-19 and policy responses in rural areas of Africa
The effects of the pandemic and of the policy measures put in place as a response are hard to measure. We need answers now but, because of the restrictions imposed by the lockdowns, we lack the data required to inform action. This calls for new ways of collecting data, as well as new approaches to evaluating impact. Phone and online surveys such as those conducted by the World Bank are well suited to gathering data in situations where travel is banned or too dangerous. In turn, modelling such as in the Local Economy Wide Impact Evaluation (LEWIE) method provides a useful tool for simulating the impact of COVID-19 on various household groups, production activities and other outcomes. In the absence of good data, simulations can give important insights into how different parts of the economy are interlinked, and how the effects of COVID-19 spread to different sectors and types of households.
The LEWIE approach combines micro survey data and econometric tools to explore the general equilibrium effects of an external shock (e.g. COVID-19) or a policy change (e.g. a social cash transfer) on the local economy – which could range from a single village or cluster of villages to an entire region or a country’s whole rural economy. Two ongoing research projects, commissioned by FAO and WFP, are using the LEWIE method to simulate the impact of the virus and of the policy responses to limit its spread. The research projects specifically explore the effects of market disruptions, lockdown measures and job losses, on individual household groups, in both rural and urban markets, as well as the effectiveness of different mitigation strategies.
The findings are quite illuminating. First, impacts on household production are very large, as are impacts on household income. Second, even though most of the measures taken to confront the spread of the virus focus on urban areas, their real income effect is consistently larger on the rural populations. This illustrates how connected the rural and urban economies are in any country, such that the lockdown of industries, restaurants, and other urban services have immediate and strong repercussions on the rural economy, affecting crop and livestock as much as non-farm income generation activities. Third, the impacts on the poor are particularly acute: in both urban and rural areas, the poor fare consistently worse than non-poor households as a result of COVID-19.
LEWIE models can also be used to design solutions to issues like, for example, understanding how much money each poor person would need to receive, e.g. in the form of a social cash transfer, in order to make up for the income drop that poor households suffered as a result of COVID-19. Based on the simulations, the transfer would have to range from $1-1.5 a month per poor person in a cluster of six East African countries, up to $3.25 in rural Eastern Kenya. While these numbers are merely indicative, they do give an idea of the magnitude of the policy response commensurate with the income losses triggered by the pandemic.
COVID-19 impacts and responses in Senegal and Peru
Faced with a steep slowdown and widening inequalities, Senegal implemented a response plan for COVID-19 of $1.8 billion to prop the health sector, stabilise the economy and shield the most vulnerable segments of the population. The government has been using the national single registry (RNU) to distribute emergency food aid to more than half a million households (70% rural), and other targeting methods to reach another half-million households that were not registered in the RNU. Two payment cycles of the Bourse de Sécurité Familliale were made at once, in an effort to provide cash support to beneficiaries, who also received sanitary kits with protective equipment against COVID-19. Other measures taken to sustain the income of vulnerable populations have involved the provision of assistance for the purchase of agricultural equipment and inputs, as well as the use of input subsidies, direct purchases and price mechanisms in support of farmers engaged in agriculture and livestock rearing.
In Peru, the government adopted strict measures since the outbreak in March, resulting in a severe blow to the Peruvian economy and a sharp increase in rural poverty due to lower agricultural prices after the harvest season, fewer non-farm labour opportunities, and a major increase in unpaid jobs in agriculture. At the same time, the pandemic increased the number of migrants returning to rural areas, exacerbated inequality in accessing basic services, and resulted in a massive use of household savings and informal credit as a way of coping. Poverty and hunger are on the rise: nearly four in every 10 rural households say they had to skip food for one in the last seven days.
As in Senegal, Peru witnessed a swift response from the social protection sector. The government has released massive cash transfer packages, food supplies through local governments to poor families, food assistance through school feeding programmes, and expanded the existing social assistance to increase cash and in-kind transfers. Peru also created an 'express' version of Haku Wiñay, an economic inclusion programme that allows extremely poor families to acquire assets, access markets and improve their income-generating activities to increase food production and improve diet diversity and self-sufficiency. Fiscal space for long-run social protection measures remains a challenge in Peru, as in Senegal and many other countries.
Taking stock and looking forward
Data from phone surveys and LEWIE simulations confirm that rural households are being hit hard by the pandemic. World Bank surveys in Nigeria and Malawi illustrate how rural households are facing higher food prices and disruptions in input markets, lost income and lower food consumption. Self-reported shocks in Nigeria show high rates of non-farm business closure and depletion of assets, which heightens vulnerability to future shocks. In Malawi, disruptions in farming, livestock and fishing activities have worsened food insecurity and hunger. In turn, LEWIE simulations predict strong negative impacts on farm production and rural income in Kenya, while in Rwanda the models suggest that households in refugee camps will be hit harder by the virus and the lockdown measures than host-country households.
Yet, most policy responses have been short-term, which is concerning in a context where COVID-19 is compounding the impacts of many concurrent shocks (climate change, floods, drought, desert locust). While exposing the weaknesses of social protection systems, the pandemic’s silver lining is that it has also revealed a host of potentially long-lasting solutions such as the digitalisation of social assistance, with spillover effects on information systems, targeting and delivery mechanisms, agricultural programmes and extension services, and financial inclusion interventions, among others.
We must learn from the crisis so that it becomes the seed for a more holistic approach to social protection in the rural sector – one that builds systems rather than relying on individual interventions, works in close coordination with other sectors as well as local and regional government, and has a strong territorial dimension. The crisis has also reinforced the case for dialogue between policymakers and researchers, for new ways of collaborating with country teams to get real-time access to data, and for new and imaginative ways to evaluate impacts and policy responses. Most of all, it has shown that COVID-19 does not lend itself to the kind of randomised experiments that have become the norm in development economics over the last decades; we should not only look at the direct effects of the virus and lockdowns, but also the indirect, spillover effects that so severely affect rural as well as urban populations.
In addition, we need to find new tools beyond cash transfers, and be flexible, bold and willing to innovate. Moving people out of poverty and hunger will require measures to tackle rising inequality, such as asset building and recovery programmes or public works interventions linked to job creation and productive processes, for instance through the maintenance of public investments and irrigation systems. Better targeting of resources to tackle the new hotspots of food insecurity (e.g., by tracking cellular data, electricity consumption, etc.), and for using technology in a manner that fosters inclusive global value chains, is a crucial advice looking forward.
The pandemic sends a wake-up call about the fragility of the current system, but also provides the opportunity to re-evaluate how we tackle the root causes of hunger and build resilience against threats – to build back better. While economic activity is slowly resuming, the world is still in a very risky situation. Any wrong movement, like failing to take care of the public health measures, keeping food value chains alive and reactivating the economies, can make us fall. This is the context in which government policy, including social protection, will have to operate for the next two to three years.
“This blog post is published as part of the activities to promote and disseminate the results and key discussions of the global e-Conference ‘Turning the COVID-19 crisis into an opportunity: What’s next for social protection?’, held in October 2020. The blog summarises the key messages from the e-Conference’s Side Event on the Impacts of COVID-19 and policy responses in rural areas of Africa and beyond. The speakers were Máximo Torero Cullén, Chief Economist at Food and Agriculture Organization- FAO; Edward Taylor, University of California, Davis; Aminata Sow, head of the Délégation Générale à la protection sociale et à la solidarité nationale (Senegal); and Carolina Trevelli, Senior Researcher at the Instituto de Estudios Peruanos. Susanna Sandström of the World Food Programme (WFP) participated as discussant, and Alejandro Grinspun of FAO was the session’s organiser and moderator. You can watch the full session here”.