Coronavirus aid must aim far beyond the short-term health response

‘The world needs a comprehensive approach that addresses the consequences of the pandemic with greater vision and nuance.’

(Louise O'Brien/TNH)

The coronavirus pandemic has pushed world leaders and policymakers to implement unprecedented economic stimulus plans. These mammoth bailouts may exceed $10 trillion, according to one estimate. But what about economic aid and support to developing countries? 

If we’re truly all in this together, as many world leaders have said, then we must help developing economies by providing longer-term economic aid on top of immediate humanitarian assistance.

So much is at stake: years of hard-won progress across the development spectrum, from poverty reduction to better nutrition and rights for the most marginalised.

The coronavirus pandemic and the prevention measures that have followed are having disastrous impacts on nearly every health system and economy. So far, however, G7 countries and other advanced economies have committed little in terms of economic stimulus for the lower-income countries least prepared to weather the storm.

The leaders of People In Need in Asia, an organisation with more than 25 years of experience supporting developing countries, believe there needs to be more emphasis on aid for livelihoods and economic recovery. 

To be clear, the immediate health response is essential. But the world also needs a comprehensive approach that addresses the complex consequences of the pandemic with greater vision and nuance.

“In our globalised world, crises in more advanced economies can have wide-reaching repercussions further afield.”

Across Asia, we’ve seen coronavirus containment and prevention measures inflict a devastating impact on a number of sectors – most notably manufacturing and tourism.

In an effort to contain the outbreak, many countries across Asia shuttered schools and limited inbound flights as early as January. In Nepal, the tourism sector is the backbone of the country’s high economic growth rate. With the coronavirus now gripping India, the government has suspended all incoming flights and even closed Mount Everest – in the middle of a peak tourism season.

In Mongolia, school closures have kept children at home, and parents – most often women – are forced out of work to care for their kids. As a result, parents working in the informal economy and small enterprises across Mongolia – and the region at large – are now particularly at risk as the global economy haemorrhages.  

These hard-working families are already feeling the pinch as they struggle to feed their children and pay the bills at the end of the month. 

“I’m still employed, but I can’t go into work for that long because I have no one to look after my children,” Tuya*, a widower and mother of four young children in Mongolia’s capital, Ulaanbaatar, told us. “My husband passed away last year and my mother is in her 70s and can’t get around too much.”

In our globalised world, crises in more advanced economies can have wide-reaching repercussions further afield.

Look no further than China. The world’s second-largest economy supplies much of the region’s garment industry with raw materials and other goods. It’s such a critical supplier that when China shut down its manufacturing sector at the height of its outbreak in January, many Southeast Asia-based garment factories also stopped production due to shortages of fabrics and trims. In Myanmar, for instance, a quarter of all investments in the garment sector in 2015 came from China, and Chinese-owned garment companies make up more than half the members of the Myanmar Garment Manufacturers Association.  

For the owner of one small garment factory employing 230 people in Yangon, staying open is getting more difficult with each passing week.

“We are only seeing 50 percent of our normal order rate,” the owner explained to our team after European distributors had cancelled all their orders in March, leaving only a few local and Japan-based customers.

Countries like Mongolia, Nepal, and Myanmar – and their workers and employers – will be particularly hard-hit as they respond to both a health crisis and an economic one. Developing and low-income countries will need help to strengthen their crisis response and restore jobs and growth.

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Dirk Guinan/Australia Department of Foreign Affairs and Trade
A flower seller in Kathmandu, Nepal. The informal economy, the economic heartbeat of Asia, will need help and guidance for months and years to come following the pandemic.

The international aid system and the private sector have stepped up with timely support to many developing countries. But much of the aid is focused on the health impacts of the coronavirus – not the socio-economic fallout. If not addressed, these impacts could be “ruinous”, as UN Secretary-General António Guterres has warned: they could further destabilise already fragile states, ratchet up political tensions, exacerabte discrimination and human rights abuses, and lead to social unrest and violence.

The advances that we’ve collectively made over the decades – women’s economic empowerment, democracy building, poverty alleviation, childhood nutrition, education, and much more – could all be lost.

So what must be done?

The informal economy, the economic heartbeat of Asia, will need help and guidance for months and years to come. So will small and medium-sized businesses, which fuel some 60 percent of the labour force in many Asian countries, according to the Asian Development Bank.

“The advances that we’ve collectively made over the decades – women’s economic empowerment, democracy building, poverty alleviation, childhood nutrition, education, and much more – could all be lost.”

In addition to the proactive steps donors have made to protect public health, interventions are also needed to mitigate the negative impacts of COVID-19 on the private sector, both informal and formal, by strengthening the social safety net for workers and their families.

In the short-term, we need to feed, educate, and protect children who are out of school. We must help vulnerable families and small businesses with cash in the form of grants, subsidies and loans, as well as easier access to finance. They need this now.

In the medium term, let’s make plans that help developing countries “build back better”. We need to broadly strengthen access to financial services for small businesses. We need strong, more resilient economies that benefit not only the top few but those at the bottom. Training small businesses on how to access loans and grants would be a start, while also helping them seek new investment.

In the longer term, let’s make corporate social responsibility a part of the DNA of every company, large and small. We need companies that are socially conscious – that not only care about the bottom line, but the well-being of their employees and community. Companies should proactively seek to improve employment standards, with an emphasis on the vulnerable, by having strong social protection systems – particularly in countries where these systems don’t exist.

The socio-economic impacts of the coronavirus may be severe, but they can also become an opportunity to build better economic support structures for small businesses, families, and societies at large. Throughout human history, during and after a crisis, we see innovations that have transformed our world for the better. 

We can use this crisis as an opportunity to harness innovation and inspire others to build a better world.

* Name changed to protect identity.

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