The Coronavirus Storm
By Professor Waswa Balunywa, PhD
The Coronavirus, like a storm, has wrecked economies worldwide in its wake; it is disrupting the world. The virus has led to shut down of businesses and laying off people from jobs worldwide. In many countries, most people have been told to stay home in an attempt to stop the spread of the virus as it brings death with it. It is an unprecedented storm. It is killing people and businesses worldwide, indeed a pandemic. It is said to be the single most important factor in the world since World War II. It required lockdown of countries to control the spread. Literally most economic activities stopped. Important to note however, that the virus has no cure! Not until the cure or vaccine is found shall we be safe. The lockdown was just intended to slow it down not to kill it. As a virus it will finally affect most people in the world. What happens when the lockdown ends?
How do organizations resume or restart their activities? Life will never be the same again for many businesses anywhere in the world, Uganda inclusive. The Coronavirus was a coffin, for others and a nail in the coffin for many organizations. But of course, there are many that will live on. They will live on but with difficulty. Government must lead the country from the lockdown to near normal life in the short run and up and running again in the long run. We also have to learn to live with the virus and adjust our lives accordingly. But all economies are shattered. To revive the economy, government must give a stimulus to kick start business, but what stimulus? What do individual organization do to restart business?
In this treatise, I present my personal view on what the problem is, how it is being responded too globally briefly and more emphasis on Uganda. I defined the problem as I perceive it and provide solutions based on what my own understanding of issues and observation from known theories or practice. It will be presented it in five (5) parts. In my view, the lockdown should be eased, not completely removed. There should be immediate measures. I see the coronavirus as an opportunity to rethink how the Ugandan economy works in the light of changing global power shifts and emerging technologies. Current thinking and policies are obsolete! If we continue with them we will end up with the same problem. A poor country. The lockdown must be eased to prevent social unrest but must be systematic, certain activities should be allowed in a sequence. Otherwise we will see numerous dead bodies around the country.
The Global Challenge and Response
Some countries have already started thinking of what they will do post Covid-19 first lockdown. It is possible there may be another lockdown. Others have already initiated actions to revive their economies. The United States announced a stimulus package of US$2.2 trillion, Germany approved US$814 billion. In fact, the stimulus is already being implemented through giving people unemployment benefits and food. Others are on the fence waiting for it to end to do something. Many countries are wondering what to do since they are broke! These are mainly developing countries who have a unique problem. It is a unique problem because they are not only poor but cannot borrow easily or print money because of their agreements with the World Bank/IMF. Most times they wait for donors to give direction. In these circumstances, the United Nations will seek funds from wealthy member countries to support the medical component of the Coronavirus pandemic for such countries. The World Health Organization (WHO) is already doing that. Some days ago, the US withdrew its funding citing mismanagement of the pandemic. This would deny assistance to poor countries. But how will developing countries manage the economic restoration.
Economic support for developing countries
For the economic support, developing countries have to make agreements with the World Bank/IMF. African countries, like all other developing countries, may therefore not have a leeway in fixing their economic recovery programmes. They have to seek support from IMF and World Bank. But is that so? Yes, they have to abide by the guidance provided by those countries that control world affairs. These countries also automatically control the multi-lateral, institutions. How will Uganda fair? IMF has approved US $109 million for Rwanda. Kenya received US $50 million, Nigeria has received US $3.4 billion. IMF has “secured” US $1 trillion to lend to such countries. This is the difference maker. Other governments make available internally, poor countries borrow externally!
In recent years even before the virus, the world has changed much. Asia, especially China, became a key player in world affairs. This arose from the phenomenal economic growth China attained in the last 30 years. The world continues to change and the Coronavirus is adding to the change. Who is calling the shots at the global scene and who is driving the change? The United States has been the global leader calling the shots. This appears to be changing given China’s rise. The US has had an alliance with “Western” countries that have believed in free market economics. The key players have been the US, Canada, UK, Germany, France, Italy and Japan from Asia. They control the World Bank and the United Nations. Between them they have about 40% of the world’s GDP! Multi-Lateral institutions and developed countries have been supporting developing countries in their development agenda through grants and loans. In the post “Coronavirus effect” changes, they are expected to play a key role. I am reluctant to use the word “post” became it is not over yet. Governments are coming out with different policies to manage the Coronavirus effect environment. Developing countries await donations and loans to support their economic revival needs. But who will support them? Let’s watch this unfold. But what will Uganda do? The Key Questions
Despite what is going on in terms of economic stimulus efforts, before the lockdown ends everywhere in the world, there are questions every country must ask, whether rich or poor, developed or underdeveloped. What do we do to stop people dying from the Coronavirus? This is a medical issue that requires doctors, researchers, facilities, medicine and money! The other question is how do we ensure that economic activities are restored? More importantly, how do we ensure that the country is able to adapt to these changing circumstances of the coronavirus effect, revive the economy and sustain its economic performance? May be also how to take advantage of the changes to improve a country’s economic performance. Other important questions are, how do we ensure this does not re-occur in future and how do we manage future occurrences when and if they do. It should also involve questions of whether our pre-coronavirus business/economic model was giving the result we wanted. If not, can we change it? Like other countries, Uganda has to raise and answer the two questions, the medical one and the economic one.
In an article on the Coronavirus pandemic, I attempted to explore how to deal with the Corona virus medical problem. Solutions continue to evolve as scientists around the world research into the problem. It is not yet settled. It is believed that a vaccine will be the solution. The Uganda government keeps on making recommendations to Ugandans on what to do. Social distancing and washing hands appear key in preventing the spread. No known cure yet. But how do you ensure social distancing in schools, buses and markets? How do you wash hands when there is no water? A one trillion-shilling questions. No good answers. The quest for answers continues.
Companies Rise or Fall on How Well They Renew Their LeadersThe economic problem arising from the coronavirus effect.
In this write up, I pen my thoughts on how to respond to the economic challenge. This is the most difficult assignment any politician, economist, thinkers or business person can do at the moment. We now need to define the economic problem on our hands. As I write now, the shutdown, its causes and its consequences is the problem. There are various economic issues that have emerged and continue to emerge as a result of the pandemic and the shutdown. Some have immediate impact, others medium term, while others are long term. What are they? What is the current economic malaise in country? We see that the Coronavirus has led to loss of jobs, shut down most of every activity. Business and non-business. We cannot even go to Church to pray. Save for the food and medical suppliers industry the rest of the economy is supposed to have halted. In a peasants dominated informal economy, only the formal sector appears to have closed down. Agriculture farmer never shut down. Some factories also remained open.
The shutdown is affecting everybody. Schools have closed, markets have closed, streets are deserted, offices are closed, football matches stopped, malls closed, most construction sites are at a standstill, theatres closed and so are hotels generally. Tourist have dried up, airlines are grounded, taxi is off the street. Most factories are closed too. Though as indicated some remained open. How do we respond to this? The exception and unique ones are peasant farmers. With these rains, most farmers are in the fields! Agricultural producers in rural areas are in their farms planting their usual crops maize, beans, cassava as is usually the case. For them, their lives have not been disrupted much yet. They haven’t seen the effect of the virus on them personally so they continue to live their unsophisticated life. By the time the lockdown officially ends, many of these seasonal plants would have shown progress.
We also have the challenge of those people, the informal business person; the street vendors who live hand to mouth. What they earn is what they use for their day-to-day activities. They have forced themselves back on the streets in desperation. They have a small amounts of capital they use for business may be Shs 100,000 and have meagre or no saving at all. During the lockdown, they used it to feed themselves, they also “ate” the capital! And now they don’t have money. But most of their good customers are off the street! What a dilemma?
Many people have lost their jobs as a result of the lockdown and its causes. We may see, may have already seen, a high level of unemployment in the country, especially the category of hand to mouth. The lockdown forced many categories of people from work, the taxi drivers, the boda bodas, the non-food market vendors, garage, shop-keepers other than those that sell food items. Of course, those who operate tourism facilities like hotels, transporters, restaurants. These were made redundant by the lockdown. Many, especially employed in small businesses may never regain the pre-lockdown employment status.
For the organizations especially business, some have already been “infected” and are dead and buried. Others may be dead and awaiting burial. Others may limp on, open and collapse. While some other will open and struggle to survive. There is really no formula for them. We might see bankruptcies i.e., companies that failed to meet their obligations over time. The Bank of Uganda has requested commercial banks to reschedule loans as a relief to borrowers.
What is driving the Change?
As a nation, we must acknowledge that there is change and there is need for change. Life has been disrupted. The economic activities have been disrupted. It cannot be business as usual in the way we manage our economic affairs. If a country, in fact the whole world shuts down because of something you cannot even see, it must be a serious issue! If people stay home for more than a week, the matter must be serious. Our response cannot be ordinary. I remember something like this happened when the NRA took Kampala in 1986. For about a week people didn’t leave homes. While we did not move, we knew the cause and knew what was going on. It is now a month! This is a major change in our lives and our economy. We therefore need to change the way we do business. We must innovate. Find new ways of doing things. What we have been using has been rendered obsolete. But what change is it (what innovations). Who is to drive it? What are the key success factors? The change the Coronavirus is demanding is not easy to define. Already we have personal change involving social distancing, washing hands as a culture that has developed more is yet to come. There must be innovations to simplify this. Organizations and nations must also change. This is coming in the midst of a major technological breakthrough, 5G. It is coming with the 4th Industrial Revolution (4thIR). What are these technologies we must adapt to change and survive?
The key players are government, organizations and individuals in the context of the Coronavirus and the economy. In this article we have singled out government. The change will be influenced by the virus effect driven largely by technology but led by government and those organizations that will survive and of course individuals and leaders. It is those countries that will innovate and or adapt to changing conditions that will prosper. Indeed, even those organizations that can innovate and or adapt to changing conditions, they too may emerge successful. It is the ability to recognize the need for change, innovate and or adapt the emerging technologies that will lead to success.
Technology has been a driver and enabler of change. The world has seen various Industrial Revolutions that have brought new products and new processes. Every new revolution makes life easier and advances technology. The first Revolution was about mechanization using steam engine. The second gave us electricity and mass manufacturing. The third gave us computers and automation and digitization. The fourth is about extending digitization. It focuses on artificial intelligence, Robotics and bioengineering among others. While the developed world is implementing the 4th Industrial Revolution technologies, Uganda is struggling with the hoe and is yet to perfect the first Revolution. The Coronavirus has exposed our vulnerability and unreadiness to respond to challenges of current technologies. Can Uganda cope? We are all (countries) on a stage in the global economic affairs, we must act and cope somehow. It is the results that will define us.
……………to be continued to Part Two…….
