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School of Public Health
College of Health Sciences, Makerere University

COVID-19: A Global Health Crisis that has become a Global Economic Crisis

Posted on : Sunday, April 19, 2020

Photo by Hello I'm Nik ūüéě on Unsplash
Richard Ssempala
Richard Ssempala

By Richard Ssempala | Source : New Vision

The world has been hit hard by coronavirus. Starting from China in December 2019, the virus has spread to more than 200 countries. It is estimated that more than 1.3 million people are infected and, as per WHO data, 7,671 cases had been confirmed in Africa as of 9 April 2020.

The number of lives lost to COVID-19 was 79,385 globally, with the biggest percentage occurring in Europe and the USA. The latter has been hit hardest while other giant economies, like Italy, France and Spain, are significantly affected, with thousands of deaths.

With developed economies suffering such repercussions, developing countries, especially in Africa, have started to feel the impacts of the disease.

These are manifested directly in the health sector and indirectly in other sectors as a result of supply and demand shocks. Besides the deaths, the economic impacts have had dramatic effects on the wellbeing of families and communities.

Many families have lost their source of income and this has translated into spikes in poverty, missed meals for children, and reduced access to healthcare, effects that will continue to be felt long after COVID-19 has passed.

The impacts of COVID 19 are both short- and long-lived. They range from losing jobs due to lay-offs to reduced incomes, loss of human capital due to death, and infrastructural deterioration, among others. One prominent feature of these effects is ‚Äėaversion behaviours‚Äô, which are the actions people and the government take to avoid the spread of the disease.

In Uganda, for instance, in a bid to control the spread of the disease, different measures were announced by the President and the Ministry of Health, some of which required the closure of several businesses. The most affected businesses are small businesses, especially small and medium enterprises (SMEs). These measures have so far succeeded in containing the spread of the virus in the country.

International travel restrictions and the full or partial closure of businesses and industries in Asia, Europe, North America and Africa have led to the collapse of global travel and are expected to reduce the flow of remittances. Tourism and remittances, which are important sources of foreign exchange, employment and income for the poor in many developing countries, have been affected. For instance, the tourism sector contributes about 7.7 % to Uganda’s Gross Domestic Product (GDP) and $1.6 billion (about sh6 trillion) to Uganda’s export earnings.

With the current shutdown, firms/organisations that cannot figure out how to conduct online transactions/business will suffer huge losses. It is now the time for entrepreneurs to leverage information technology (IT) to be able to compete favourably. This also speaks to the government’s need to invest more in IT, science and innovation

Over the last five financial years, these sectors have consistently received less than 1% of the national budgetary allocations (in FY  2018/19, ICT received sh149.1b, which was 0.6% of the total budget; in FY 2019/20, the sector received sh146.2b, which was 0.4% of the national budget), yet ICT would be a great enabler for firms to break even in periods such as this through engaging customers via online platforms, just like it is done in many other countries. Some countries have so far employed robots to spray areas affected by COVID-19, and this further demonstrates the need to invest in technology advancement.

What next?

The COVID-19 pandemic has portrayed the interlinkages between health and economic activities. Countries ought not to prioritise economic drivers alone in their national budgetary allocations but should also consider other social sectors, like health.

While every country’s focus is currently on fighting the health crisis, planning how to address the likely economic impacts of this pandemic at macro and household levels should start. The aim should be to minimise the adverse effects of the pandemic in the post-coronavirus period.

Both the public and private sectors should urgently collaborate to avert the likely effects of COVID-19. The Government of Uganda should work to further improve the business climate for the private sector and continue undertaking serious reforms to overcome institutional weaknesses.

The crisis is also an opportunity to strengthen the analytical capacity for health-related research in Uganda to provide policymakers with evidence-based solutions for safeguarding Uganda’s economy during future pandemics and other crises.

Above all, this pandemic is a strong reminder of the interconnectedness of the world and the importance of global cooperation in addressing health challenges. This is because it greatly affects sectors other than health as well.

The writer is the -Knowledge management officer, SPEED Project- Makerere University School of Public Health | Unsplash by Hello I'm Nik on Unsplash

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