His Excellency Nana Addo Dankwa Akufo-Addo on his 4th address to the nation on the measures taken against the spread of the coronavirus.
This statement caught the attention of the world, as it clearly defined the situation the global economy found itself in, which was whether to prioritise the health of citizens or the economy.
The global economy around that time believed the health of the people was more important, hence the need to impose lockdowns at the detriment of the economy.
However, two months later, with COVID-19 cases still increasing, with no signs of a vaccine or cure yet, major economies across the world have started opening up.
President Akufo Addo in his 7th update to the nation on the measures taken against the spread of the coronavirus delivered on Sunday April 19, 2020, announced the lifting of a three-week partial lockdown imposed on Greater Accra, Greater Kumasi and Kasoa, at a time when the country’s COVID-19 cases were going up.
Even though President Akufo Addo cited several factors that necessitated the lifting of the partial lockdown such as the expansion in the numbers of treatment and isolation centres, the enhancement of the capacity to test, a better understanding of the dynamism of the virus, the ramping up of the country’s domestic capacity to produce her own personal protective equipment, sanitisers and medicines, one of the major concerns was the severe impact of the lockdown on the poor and vulnerable in society.
Choosing economy over health?
Has the global economy found a way of bringing people back to life or this is a clear case of choosing the economy over health?
Lockdowns come with costs to the economy be it total or partial with the hardest hit being poor countries. In a report issued on May 7, titled, “COVID-19: Lockdown Exit Strategies for Africa”, a full one-month lockdown across Africa was estimated to cost the African continent about 2.5 percent of its annual Gross Domestic Product (GDP), equivalent to about US$65.7bn per month, according to the Economic Commission for Africa (ECA).
Currently, the process is underway to estimate the costs of the pandemic on the various sectors of the Ghanaian economy.
A busy commercial city of Lagos, Nigeria
In sub-Saharan Africa, COVID-19 and lockdowns could drive 420m people into absolute poverty. The longer lockdowns continue, the likelier it is that they will cost more lives than they save.
The impact of lockdowns on rich countries could be less dramatic as compared to poor countries. America’s unemployment rate increased from 3.5% in February to 14.7% in April and there are severe impacts of the pandemic on other developed economies across the globe.
Appropriate exit strategies from lockdowns are required by various governments. There is the need to balance the preservation of lives while alleviating economic challenges and continuing to suppress the spread of the virus- ECA’s Executive Secretary, Vera Songwe.
The measures that various governments have put in place ranging from lockdowns, stay at home orders, social distancing are having severe consequences on businesses and individuals.
A former Director of the Institute of Statistical, Social and Economic Research (ISSER), Professor Asante, in an interview said there is a trade-off between health and the economy as far as the fight of the current pandemic is concerned.
“Yes, there’s a trade-off between health and economy. The trade-off is that we need healthy citizens to help build the economy. GDP, production, business and almost everything is running down in most countries because of the COVID-19. Even though businesses will like to start work, they are also thinking of the health of their employees, and that is where this issue of health versus economy becomes a topical issue,” he stated.
The former director of ISSER indicated that both health and the economy were important but noted that there was the need to strike a balance and get it well.
Professor Asante said;
“Health is paramount, if you don’t have good health you cannot go back to work, businesses can also not function. So, the health is very key. If we make a mistake and just allow everybody to go out then we might be getting into trouble. For me, health is very key before the economy but we need to get the balance; at what stage of the health should we move the economy forward”.
For the optimal mix of health and economic goods that should be produced to move the economy forward, Frof Asante said;
“For me, the stage that is right is where everybody who wants to work is able to test their status of COVID-19 and be confident to move out of their homes to the work place or the confidence to move out to the classroom”
Another economist at the Department of Economics, University of Ghana, Professor Nketiah-Amponsah, also believes that the trade-off that exists between health and economy is linked with productivity because healthy people are more productive.
According to him, if your health deteriorates you cannot be productive enough, hence the need to safeguard health.
At the macro level, he said there was displacement of expenditures as a result of the outbreak.
“Most of the expenditure now go into combating the virus which should have been invested in the other sectors of the economy. For instance, the cost of testing is also a major concern as estimate indicated that it cost about $100 per test in Ghana. Also, the amounts spent on people who are quarantined; accommodation, food, and staff time (nurses, doctors) which cannot be quantified because it’s more of an opportunity cost,” he explained.
Dr Tedros Adhanom Ghebreyesus, Director of the WHO
On the contrary, the Director-General of the World Health Organization (WHO), Dr Tedros Adhanom Ghebreyesus, in a media briefing on COVID-19 on Friday, May 15 indicated that investment in health is the greatest thing to do and no trade-off exists between investing in health and the economy.
“The COVID-19 pandemic has shown again and in the strongest way possible, that investing in health is not just the right thing to do; it’s the smart thing to do. There’s no trade-off between investing in health and economy. Health is an investment in our collective future”- Dr Tedros
Balancing the benefits against the costs of lifting lockdowns
In the wake of easing of lockdowns, there is the need to balance the benefits of resuming economic activities against the potential cost of another increase in infection rates or even in the worst-case scenario, the danger of a possible second wave of the outbreak.
Prof Nketiah-Amponsah said;
“This is where public education and adherence to the protocol is key”.
According to him, if everybody were to behave rationally, then perhaps the government could allow people to go to work but with some level of monitoring. But nobody is sure if people are going to do the right thing. For instance, if transport owners are left alone, they will just be overloading. The basic problem in our part of the world has to do with self-motivation, how are people motivated enough to do the right thing on their own, he quizzed.
Professor Asante also believed that the way to go is mass testing where everyone will be tested to know their status on the COVID-19. He said;
“What we need to do is to try and make sure that the population is tested, this is very key. At least once that is done, the confidence will be there for somebody to go to school and the confidence will be there for somebody to go to his or her workplace. Currently if the test is not done, you stand the risk of increasing the rate of infections and if you are not careful, that is where the economy will risk the health status”.
Health implications of easing lockdowns
Several countries have begun to ease lockdowns and trying to get their economies back on track. After seven weeks of restrictive measures, more than 4.4 million Italians went back to work last week, family visits are now permitted by people in the same region, parks are opened for walking and running, restrictions on funerals have been reduced, and with lower rates of infections, bars, hair salons and restaurants will be allowed to open from June 1, 2020. However, ban on social gathering and social distancing still continues.
In Belgium, businesses activities have resumed but wearing of masks is compulsory for staff and passengers on public transport and employees in shop selling fresh food. Portugal, Poland, Slovenia, Hungary and Germany have all eased restrictions and allowed public spaces and businesses to partially reopen.
However, resources are inadequate in less developed countries to be able to put stringent measures that have been implemented in most rich countries when restrictions are relaxed.
According to Prof Nketiah-Amponsah, there are health implications of lifting the lockdowns, but this has to do with the balance. According to him, easing restrictions means people will come together, people will socialize, hug and shake hands and you don’t expect the government to monitor all these people. So, in most developing countries the basic thing has to do with education and attitudinal change.
Prof Nketiah-Amponsah said;
“If restrictions are lifted and we don’t adhere to the protocol, we will end up worsening the situation. But we can’t continue in this situation for too long, so there will be the need to lift restrictions but this has to be done gradually. When you lift one or two, then you evaluate how people are behaving and if people are doing the right thing, you can lift another. Then gradually we go back to normalcy.”
Prof Nketiah-Amponsah believes education is key if we are to ease lockdowns in most African countries. But he however, lamented that, adhering to safety measures and protocols will be a major obstacle to easing of restrictions in Africa. But gradually most economies in Africa will be able to normalize the situation otherwise the economies will suffer significantly. Fiscal stimulus given by various governments is in order but at the moment, it might not do much because some of these enterprises are already dead, so it will take some time for the multiplier effect to be realized.
“Education is key if we are to ease lockdowns in most African countries” - Prof. Nketiah-Amponsah