As individuals, families, industries and nations plot their course through this pandemic, there is a painful truth that is yet to be properly acknowledged. The Covid-19 pandemic – and the resulting global recession – is going to have a devastating and destabilising effect in the world’s poorest countries.
In response, wealthy countries and international financial institutions will need to fundamentally shift their approach to aid and debt. This cannot be business as usual. Extraordinary measures are needed to tackle the extraordinary problem we face.
For rich countries, that will mean a one-off increase in the amount they spend on foreign aid. For the international financial institutions it means changing their lending terms. The alternative is dealing with the spill-over effects for many years to come. That would prove even more painful, and much more expensive. For everyone.
There are many things we do not know about coronavirus, but it is possible to assess some of the costs of the necessary response in the poorest countries, and how they can be met.
We face the biggest economic slowdown in living memory. The International Monetary Fund and World Trade Organization both predict the global economy will get 3% smaller this year. That would make theGreat Lockdown the worst recession since the Great Depression.
In the poorest countries we should be ready for a rise in conflict, hunger and poverty. The spectre of multiple famines looms. We can already see economies contracting as export earnings, remittances and tourism disappear. As countries with weak health systems attempt to fight the virus, we can expect an increase in measles, malaria, cholera and other disease as vaccinations are put on hold, health systems buckle under the strain and medical supply chains are disrupted.
Our best estimate is that the cost of protecting the most vulnerable 10% of people in the world’s poorest countries from the very worst impacts of the pandemic is approximately $90bn (about £73bn). This is a lot of money. But it is an affordable sum, equivalent to just 1% of the global stimulus package the world’s richest countries have put in place to save the global economy.
About two-thirds of it could come from organisations such as the World Bank and the International Monetary Fund. They will need support to change the terms on which they help the most vulnerable countries: front-loading money, reduced interest rates and further debt relief.
The remainder will need to come from “official development assistance” – the money wealthy countries spend on foreign aid. That currently stands at about $150bn each year. A one-off 20% increase over the next 12 months would generate the $30bn needed.
An increase in money spent overseas may be an uncomfortable thought for countries battling the virus at home. These are countries where many people are losing their freedoms, their jobs and their loved ones and countries making significant sacrifices while facing an uncertain future. But it is precisely at this moment when those sacrifices are starting to pay off, and as those countries seek to reopen their economies, it makes sense also to support the most vulnerable.
Some may be sceptical that additional resources of that magnitude can be generated in the current circumstances. That is not my experience. In less than two years after the financial crisis of 2008, fundraising for UN-coordinated humanitarian appeals had increased by more than 40%. That was a result of human generosity and empathy – but also a calculation of national interest in the donor countries.
Recent history shows us that what happens in the world’s most fragile places has knock-on effects, whether it’s through uncontrolled migration, terrorism or global instability. Leaving the virus to spread unchecked in the world’s most fragile countries, and free to circle back round the world, is in no one’s interest. Nor is economic collapse and instability in the poorest nations.
In a week in which people in some parts of the world have been given cause for optimism, we have seen how the extraordinary actions of individuals can change the trajectory for a whole nation. The same is true on a global level.
Mark Lowcock is the UN under-secretary-general for humanitarian affairs and emergency relief coordinator.
