World Bank Hails Tanzania, Warns African Countries Duplicating Western Anti-COVID-19 Approaches

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World Bank has warned African countries against copying the Western policies in combating COVID-19 and has thus applauded Tanzania for employing unique approaches.

This call was in latest the Africas Purse report titled as Assessing the Economic Impact of COVID-19 and Policy Responses in Sub-Saharan Africa that was released today.

The report commended Tanzania as one of the best examples for its strategic approaches that considers the best of its political economy and well-being of the society.

Thanks, President John Magufuli for not duplicating policies implemented in advanced countries and some middle income as pasted by some African countries in the region, the report reads in part.

With 32 COVID- 19 confirmed cases, 3 deaths and 5 recoveries, Tanzania unlike other African countries has not locked down businesses and its citizens. The country has not also closed its borders but initiated strict testings and 14 days quarantine to all arrivals.

The report warned of catastrophic consequences to sub- Saharan countries that have copied and pasted anti COVID- 19 policies.

The reported noted that facing a fast-changing situation with great uncertainty and so many unknowns, most governments around the world have resumed to similar approaches to contain the COVID-19 pandemic these include South Africa, Ghana, Rwanda, Kenya, who have reacted quickly and decisively to curb the potential influx and spread of the COVID-19 virus very much in line with emerging international experience.

WB advised African governments to deploy a series of emergency measures and structural features of African economies that shape the policy responses that are designed and implemented to fend-off COVID-19.

The World Bank has given multiple reasons why economic policies implemented in Sub-Saharan Africa should be different from those adopted in advanced countries and (some) middle-income countries.

Highlighting reasons why African governments should employ different measures, World Bank noted that informal employment is the main source of employment in Sub-Saharan Africa, accounting for 89.2 percent of all employment (ILO 2018).

Based on the number of entrepreneurs (own-account workers and employers) who are owners of informal economic units, the vast majority of economic units in the region are informal (92.4 percent).
Informal workers lack benefits such as health insurance, unemployment insurance, and paid leave and a prolonged lockdown will put at risk the subsistence of their households.

Secondly, Small and Medium-size Enterprises (SMEs), an important driver of growth in economies across the region, account for up to 90 percent of all businesses and represent 38 percent of the regions GDP.

Access to finance is one of the main challenges facing SMEs in normal times with the majority of these firms lacking the finance needed to grow.
Prior to COVID-19, the finance gap for SMEs in the region was estimated at US$331 billion (IFC 2018).

Thirdly, concerns about the negative economic impact of the COVID-19 outbreak prompted interest rate cuts in several African countries in line with monetary policy actions around the world.

However, this type of monetary stimulus may not be effective for two reasons: (1) the prevalence of supply effects at the height of the containment measures (i.e. reduced labor supply and closed businesses, especially in contact-intensive sectors), and (2) the weak monetary transmission in countries with underdeveloped domestic financial markets.

The report noted that African economies still need to design policy pathways to achieve sustainable growth, economic diversification, and inclusion.

The economic sustainability of African economies depends on their ability to transform their depleting stock of natural wealth into other reproducible capital assets such as physical capital, infrastructure, and human capital.