COVID-19 and the tasks before managers of our economy
We are living in extremely dangerous times. One only needs scan the newspapers or run one’s finger through one’s social media timeline to read, see, and hear about the latest alarming record notched up by the COVID-19 pandemic in some parts of the world. Whether it’s the rapid increase in the number of new infections, a spike in recorded fatalities, or the growing burden on already distressed health infrastructure, the numbers are indeed worrisome. Yet, these are also interesting times. Across the world, researchers are scanning the virus’ genome and running their fingers through its many infection pathways looking to find vulnerabilities that can be exploited to develop a cure. A treatment, prophylactic, and or vaccine is some months away. But it helps that parts of the virus appear susceptible to existing treatments.
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Mankind’s immediate challenge over the next few months is to stay alive until this breakthrough moment is reached. The panic and misunderstandings that have become associated with this pathogen have not been helpful, though. Instructed to keep public gatherings below 20 people, and folks interpret this to be some fairy-tale threshold at which infection through public gatherings is at its least risky. Lower numbers simply make it easier to trace contacts in the event of exposure to a positive person. Likewise, lockdowns are imagined as necessary for the virus to exhaust itself. Yet, this expedient simply slows the rate of infection, allowing healthcare facilities under pressure from the disease’s rising incidence to better cope.
Nowhere is this muddle deeper and its implications more significant than in the management of economies reeling from the negative effects of the pandemic. Near-term challenges are of a medical nature – keep new rates of infections low, while the great and good in the scientific community race to find a fix. Over much lengthier planning horizons, however, the challenge is to ensure that our humanity remains a going concern. If we are to avoid any of several post-apocalyptic scenarios, then banks must not fail, businesses must not go under, and, somehow, consumers must keep spending – until we can return to a semblance of normality. These are today’s main economic challenges. And across the world, the most apt response has been conceived by both fiscal and monetary authorities in terms of throwing humongous sums of money at their respective economies.
But, as with the medical case, there’s no more clarity here. Given how draconian the lockdowns being implemented are, what difference does so much money in the pockets of households make? True, most victims of COVID-19 present mild symptoms. And a frighteningly large number of deaths are of people with pre-existing medical conditions. But until we can gather again in our usual numbers, factories and workplaces will remain neutered. How long can businesses be supported by public money without restarting their plants and a recovery in the demand for their goods and services?
My favourite newspaper headline last week was “Chinese factories resume production. But demand from Europe evaporates”. The point is that it wouldn’t matter how much money the Chinese hurl at their economy. Without global economic recovery, it will still hurt. The Chinese, however, have the benefit of local demand. We don’t. Yet, we have announced spending initiatives similar to economies elsewhere. In the best of all possible worlds, Nigeria’s easiest route out of this crisis would be the kind and level of spending that boosts a recovery in the global market for crude oil. It’s not just that we do not have kind of money. We never had that level of influence in that market.
We will increasingly see tighter lockdowns, as our caseload of persons contracting COVID-19 (and deaths from it) builds. Of course, we await breakthroughs in the management of the disease from elsewhere. Accordingly, we would also have to contend with the question of how supportive of domestic demand would money in the hands of one who cannot go out of her house be. Our businesses will similarly contend with the dual dilemma of diseased demand, and idle plants. So, what would become all the monies that have been announced so far by both governments and our big business-wallahs for dealing with this crisis?
We’d be best advised to deploy it to boost capacity and know-how in the healthcare sector. These may present as long term goals. But we have no known competence of assisting big businesses in a way that makes the life of the average Nigerian better. In partial evidence of this, just look at the alphabet soup of intervention programmes that the apex bank had going before these crises. In the main? Look no further than the premium we still have to pay for cement vis-à-vis what nationals in other countries pay.
