A variety of experts in Africa have reflected on the impact of the Covid-19 pandemic at a recent IFoA webinar, blogs IFoA Fellow Chris Sutton.
A Zoom webinar with presenters joining from Harare, Lagos, Lilongwe, Lusaka, Nairobi, Cape Town, Lancashire and Sussex, as well as registered participants from over 50 countries, was a feat of WiFi and mobile technology, and a reminder of the global nature of both the pandemic and the actuarial profession’s response.
The objectives for the webinar were to share experiences of actuaries from across Africa with a wider audience; to explore the potential for innovative solutions (sharing some of the work of the ICAT taskforce) and perhaps most importantly, to begin a conversation.
Tawanda Chituku, an ICAT member based in Zimbabwe, recruited a panel of speakers from Kenya, Malawi, Nigeria, South Africa, Zambia and Zimbabwe. It was striking that each panel member related how the challenge of COVID-19 cannot be understood just in health and mortality terms but needs appreciation of the social and economic context into which the virus has struck.
A common theme was the size of the “informal economy”. Sundeep Raichura explained that in Kenya the informal sector accounted for 85% of employment and four in every five new jobs. Without a social protection safety net, and having very little if any savings, income crises come very quickly for workers in this sector.
Sundeep sees “COVID-19 as a trailer of a much deeper crisis we will face as a country (and indeed the African continent) if some of these challenges of adequacy and coverage are not addressed.”
Making provision for several weeks due to COVID-19 will look small compared to the forthcoming challenge of providing for informal workers for decades once they are too old or unwell to work, Edwin Mulenga from the Reserve Bank of Malawi agreed. Where there is no social security system and a sizeable informal sector, there is a need for holistic solutions that take account of local circumstances.
Those local contexts include a number of countries in the midst of conflict, for example in Nigeria.
Laura Llewelyn-Jones explained how the pandemic has made provision of humanitarian support more difficult for those affected. In addition, food price inflation has suddenly increased to over 20% in Nigeria. Hence emergency food supplies and small cash transfers to 1 million households have been important safety net responses there.
South Africa, like many European nations, has used lockdowns to attempt to manage COVID case numbers. However, Barry Childs pointed out that this approach has heightened issues around the of sustainability of social protection, where a relatively small tax base (both corporate and personal) is trying to support wide a range of needs. Low savings and a highly skewed income distribution mean the population is very susceptible to income shocks.
Taonaziso Chowa in Zambia noted that high unemployment and deficits in statutory pension schemes create challenging circumstances for social protection. However, in response to a question, he raised an important point about the difference between urban and rural communities in this area.
Many rural areas are self-sufficient in food (unless drought hits) but have a big need for improved healthcare, whereas in urban areas having sufficient income to buy in food is a much more important safety net concern. He sees the new National Health Insurance Scheme launched in 2020 as an important initiative. Taonaziso was able to contrast Zambia with Tanzania where a more extensive social assistance program has been helpful.
In Zimbabwe the background of the 2009 currency conversion and subsequent hyperinflation and the 2018 move from US dollar to Zimbabwean dollar (which further depleted savings) meant substantial challenges existed before COVID-19.
Donald Hove, President of the local actuarial association, stressed the need for economic solutions to inflation before meaningful progress can be made in social protection. Again, the informal economy accounts for the majority of workers and the compulsory national social security scheme excludes these people. Pensioners are increasingly reliant on family members, subsistence farming or joining the informal sector.
The pandemic and associated income shocks has led to growing interest in universal basic income (UBI) approaches to social protection and Stephen Moncrief shared information on experiments that have been run in the region. These include Namibia (2008-10), Kenya (a 12 year “Give Directly” scheme with payments via mobile phone) and most recently a targeted pandemic response in Togo (2020-21) called “Novissi” again using mobiles. Larger UBI initiatives will be dependent on international third party funding however.
Affordability of social security initiatives is problematic across Africa. There remains a difficult balancing act for governments between prioritising economic regeneration and wider social protection coverage. A number of webinar participant questions looked to explore this tension.
There is a need for stronger economies for sustainable social protection financing but in the meantime the demand for safety nets, especially in the informal sector, continues to grow.
It might be that solutions need to come from beyond national governments. Some infrastructure for delivery exists using mobile phone networks, digital payments and local cooperatives. However multi-national funding arrangements are required. Unfortunately, COVID-19 has tended to make political leaders look inward not outward, so it might be that the interconnected nature of African economies diminishes for a while.
The webinar highlighted how the pandemic has created substantial challenges in social protection but at the same time presented an important opportunity for actuaries to influence policymakers in this area.
Members can watch the event here while non members can view it on Zoom using the password IFoA123!
