In terms of where poverty is located, it is likely to increase dramatically in middle-income developing countries in Asia, such as India, Pakistan, Indonesia and the Philippines. This points to the fact that much of the previously poor population in these countries moved to just above the poverty line. In other words, these countries’ recent economic progress has been relatively fragile. We’ll also likely see new poverty in countries where it has remained relatively high over the last three decades, such as Tanzania, Nigeria, Ethiopia and the DRC.
How to respond to the poverty pandemic
COVID-19 poses a significant threat to developing countries, as their health systems tend to be weaker. More severe cases have also been linked to high blood pressure, diabetes and air pollution, all of which are prevalent in developing countries. Meanwhile, there are suggestions that COVID-19 could hinder the treatment of other illnesses such as TB, HIV/AIDS and chronic malaria.
But developing countries generally have a lower proportion of people at high risk from COVID-19 in terms of age (>70 years). As such, economic shocks may pose a greater relative risk to their populations. The question emerges as to whether lockdowns are the best option to contain the virus in developing countries if they entail severe income losses. Estimates of the share of jobs that can be performed at home is less than 25% for many developing countries – much lower than the ~40% recorded in, for example, the USA and Finland. It’s as low as ~5% in countries such as Madagascar and Mozambique.
Consequently, there’s also a clear need for a range of social safety-net policies. These already exist in many developing countries, but their coverage and funding needs to be expanded substantially. Such policies include cash transfer programmes, universal one-off cash payments, in-kind food/vouchers, school feeding schemes and public works programmes. In middle-income developing countries, these are funded by the national government, whereas in low-income countries these are often co-funded by donors. Any set of policies should also incorporate “pay to stay home” or “pay to get tested” schemes.
The long crisis
Looking further ahead, the poverty impacts beyond 2020 are closely related to if or when an effective vaccine is developed. Even if we take the best-case scenario and a vaccine is discovered later this year, it’s uncertain how long it would take to reach the entire global population. It could take years.
There is no guarantee developing countries would get access to the vaccine at a reasonable cost, or if everyone in developing countries would get the vaccine for free. We could end up living in a new COVID-19 apartheid, with the vaccinated and non-vaccinated residing in separate areas and working in different labour markets. This is a startling but very real possibility that no one is talking about much yet.
While this might sound far off, there are already some countries – such as Chile – issuing “immunity passports”. Such passports might determine what work people can do by determining where they can go. This could leave the poorest without access to earning opportunities or only with lower-income opportunities if their movement is restricted.
The crisis is increasingly looking like a long crisis. If so, it will have repercussions on global poverty for years to come.