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Business Writer
Widespread impact of Covid-19 on incomes, jobs and human capital is likely to amplify pre-existing inequalities, between rich and poor countries and between the privileged and underprivileged within countries, World Bank’s COVID-19 High Frequency Phone Surveys (HFPS) that are being conducted across the developing world show.
While the surveys find large income losses among households everywhere, they show that those in International Development Association (IDA) countries are more likely to experience income losses since the start of the pandemic.
IDA is the part of the World Bank that supports the world’s poorest countries.
It is the largest source of concessional finance for the world’s 74 poorest countries, 39 of which are in Africa. Zimbabwe is also one of the IDA countries.
According to the World Bank’s COVID-19 High Frequency Phone Surveys (HFPS), which is still in progress in Zimbabwe, income losses in IDA countries are more prevalent than in non-IDA countries.
The survey revealed that while large income losses among households are everywhere, those in IDA countries are more likely to experience income losses since the start of the pandemic.
On average, income losses are reported by about two-thirds of all households in an IDA country compared to 59 percent of households in non-IDA countries.
In Zimbabwe roughly 64 percent of respondents reported having a job before the imposition of mobility restrictions although this was reduced to 51 percent in July 2020.
However, households in IDA countries are less likely to suffer job stoppages during Covid-19 than those in non-IDA countries.
An average of 29 percent of respondents who were working pre-Covid stopped working in the last week before the survey in IDA countries, compared to 39 percent for non-IDA countries.
This is probably because many workers in low-income countries are in the informal sector or self-employed and not covered by safety nets like unemployment insurance. Thus, they cannot afford to stop working even when their earnings are low.
Household income losses are also linked to a decline in remittances, usually from family members working in a different region or country. An average of 60 percent of households across all countries in the database report lower remittances since the onset of Covid, with a higher average for IDA countries than for non-IDA countries.
However for Zimbabwe, remittances are expected to close at record levels of US$940 million.
Estimates from the Reserve Bank of Zimbabwe (RBZ) show that as at October 30, 2020, Zimbabwe had registered a 48 percent jump in remittances to US$760 million, from the prior comparable period.
Dr Mangudya however said the increase was largely due to increased use of formal channels, amid national lockdowns and restrictions implemented by countries due to Covid-19.
The report also showed that food insecurity tends to be more severe in IDA countries.
An average of 51 percent of households in IDA countries report an adult skipping at least one meal due to lack of resources in the last 30 days, compared to 34 percent of households in non-IDA countries.
In four of the IDA countries, more than 60 percent of households report skipping meals.
Even though this deprivation cannot be attributed entirely to Covid-19, lower food security in the poorest countries of the world during a pandemic is a cause for serious concern.
In Zimbabwe results of a survey conducted by the Zimbabwe National Statistics Agency (Zimstat), to see the impact of Covid-19 on households, revealed that half of urban respondents and two thirds of rural respondents skipped meals or ran out of food in the 30 days before the July 2020 survey.
The World Bank survey also revealed that social assistance is more limited in IDA countries than in non-IDA countries.
The average coverage of social assistance among households in IDA countries is 14 percent, compared to 30 percent in non-IDA countries.
The differences between countries likely reflect gaps in resources, institutional capacity, and the coverage of the pre-existing public safety net system.
The Zimbabwe government this week raised the humanitarian assistance allowances for vulnerable persons hit by Covid-19 to $800 from $300.
The World Bank thus recommended that in mitigating the effects of the crisis and supporting the recovery, the needs of the poorest countries must be prioritised by the development community for the world to have any chance of fulfilling the commitment to end extreme poverty by 2030.
Eligibility for IDA support depends first and foremost on a country’s relative poverty, defined as GNI per capita below an established threshold and updated annually ($1 185 in the fiscal year 2021).
There is, however, no active IDA financing for Zimbabwe due to protracted non-accrual status.
Bongani Ndlovu