Research suggests that at the height of lockdowns between March and June 2020, Africa's GDP shrunk by 5 percent, and further study is required to identify how Governments in Africa could have rolled out Covid-19 curbs with minimal economic disruptions.

A researcher has identified the need to set up dedicated trust funds to mitigate growth challenges facing countries in the wake of the pandemic.

Dedicated trust funds in Africa, Prof Germano Mwabu who teaches economics at the University of Nairobi said would come in handy to finance “Covid-19 like crises” to reduce economic inequality challenges.

The establishment of trust funds would work better as conventional mechanisms that initiate and sustain pro-growth poverty reduction have been proven ineffective in times of the Covid-19 pandemic, noted Prof Mwabu.

He was speaking when he delivered a presentation on poverty, growth, redistribution, and social inclusion in times of COVID-19 pandemic in Africa at a global virtual research workshop hosted by the African Economic Research Consortium (AERC).

The 55th AERC plenary session of the biannual research workshop explored the theme: poverty, growth, redistribution and social inclusion in times of Covid-19 pandemic in Africa.

Alongside Prof Mwabu, the United Nations University World Institute for Development Economics Research research fellow, Dr Simone Schotte, in his presentation titled “The Labour Market Impact of COVID-19 Lockdowns: Evidence from sub-Saharan Africa”, showed that the pandemic’s shock had exposed and exacerbated pre-existing vulnerabilities in Ghana.

Dr Schotte noted that lockdowns had slowed down recovery in his study, featuring Kenya, Ghana, and South Africa.

The labour market, he said, is still suffering from anxiety; despite signs of recovery.

AERC, the global economic affairs think tank headquartered in Nairobi and led by former Central Bank of Kenya Governor Professor Njuguna Ndung’u hosted the forum.

Hundreds of economic policy researchers, scholars, public policymakers, non-state actors, and economists participated in the workshop.

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AERC Executive Director Prof Ndung’u said the global think tank would continue supporting such forums to foster the awareness of economic affairs.

“Such plenary sessions have informed, influenced, and inspired researchers and the wider public on a wide range of issues relevant to policymaking,” Prof Ndung’u said.

Prof Ndung’u added that policy responses to combat the pandemic led to significant social and economic disruptions.

Evidence suggests that at the height of the lockdown between March and June 2020, Africa’s GDP shrunk by 5 percent. During the entire period, the continent’s GDP declined by 2.5 percent.

In his presentation, Prof Mwabu noted that further research would be required to identify how Governments in Africa could have implemented Covid-19 curbs with minimal economic disruptions.

“In a pandemic such as the Covid-19 period, policies designed to sustain the virtuous spiral of pro-poverty reduction growth should focus more on addressing effort-based inequalities than those due to circumstances. A Trust Fund to finance Covid-19 like crises is needed,” said Prof Mwabu.

He added that “the mechanisms that initiate and sustain pro-growth poverty reduction would not work in times of Covid-19 as the resource transfers that trigger poverty reduction would be directed, as they should, to saving and protecting lives, rather than to poverty reduction.”

Further, resources to sustain pro-growth poverty reduction, he explained, would be constrained as pandemics destroy and disable human capital.

Economic research, he noted, has also established that school closures slow human capital formation.

“In effect, the large social protection programs required to trigger pro-growth poverty reduction in Covid-19 times would be infeasible in Sub-Sahara Africa,” Prof Mwabu said.

At the Plenary session, Kenya’s Commission on Revenue Allocation (CRA) Chairperson Dr Jane Kiringai chaired and led a panel discussion session on public/private sector policy featuring distinguished panellists, including distinguished economists, private and public sector leaders from across the continent.

British Economist and Political Scientist, Professor James Robinson, of the University of Chicago delivered a Memorial Lecture on “Africa’s Latent Assets” in honour of the former Governor of the Bank of Tanzania (BoT) and renowned African Economist, the late Prof Benno Ndulu, who passed on earlier this year.

Traditionally, the AERC Biannual Plenary attracts hundreds of researchers, academics, policymakers, non-state actors and economists, providing a forum for participants to interact with a worldwide network of professionals to discuss issues relevant to Africa’s economic development.

They also provide an opportunity for monitoring the progress and quality of the various research projects sponsored by AERC, fulfilling one of our major mandates – to strengthen local capacity for conducting an independent, rigorous inquiry into problems facing the management of economies in sub-Saharan Africa.

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