Preparing to rebuild our economy now

Introduction

Managing public health remains an urgent priority for businesses and governments alike. Looking beyond the immediate horizon, it is already clear that navigating the broader challenges to public health will remain a priority for much longer and therefore, the time is now to start that journey for both emerging and developed economies.

The extent of economic distress and the path to recovery is still not clear but we know that it depends to a large extent on public health and how policymakers and society at large respond. Erring on the side of caution, we should prepare for a prolonged period of recovery given the reduced state of international trade and weak demand and consumption patterns locally and globally.

In East Africa, sectors such as travel, tourism, horticultural and construction have been particularly hard hit, compounded by slower rates of activity in other sectors. Therefore there is an urgent need to commence with ensuring economic recovery takes place as soon as possible. Interventions such as employment protection, social protections, and small businesses support should be enhanced or initiated with the rebuilding process in mind. It is time to balance the interventions supporting economies and public health without compromising either one.

Rebuilding distressed economies and sectors is about more than just returning to ‘business as usual’. We need to build more resilient economies that can sustain and recover more quickly from disruption. Resilience is developed through preparation: physical, mental and economic activities that help us to manage change and emerge stronger rather than repeating old patterns.

Change is hard. As consumer behaviour and enterprise operations shift in response to change, business models will also need to change. Rebuilding and strengthening confidence will take time. Ultimately, investors need to believe that a better future awaits us.

Thinking beyond conventional economic creeds This is also a good time to consider the type of economies and governance that will serve us well going forward. We will need to shift our assumptions about socio-economic mobility, becoming more inclusive and supportive as we dismantle systemic inequality and grow more resilient. Social safety nets will need to be strengthened and broadened, such as by providing healthcare and a universal basic income and reducing the risk of unrest. We will need to create more opportunities for the less fortunate to work and contribute meaningfully to society.

As governments develop longer-term economic stimulus packages, they should design them around the core principle of building stronger, more resilient economies that support the long-term health and wellbeing of citizens. Creating jobs, tackling climate change and building more resilient and inclusive societies won’t happen by accident. We cannot go back to business-as-usual and old habits of polluting and spending with abandon that inflict harm on the very people, communities and economies that these stimulus packages seek to support.

"As consumer behaviour and enterprise operations shift in response to change, business models will also need to change. Rebuilding and strengthening confidence will take time. Ultimately, investors need to believe that a better future awaits us."

Supporting MSMEs to grow and create jobs Governments must play a key role in driving these changes, putting in place the policies that will support economic growth and directing investments in the economy. Specific attention should be paid to micro, small and medium-sized enterprises (MSMEs). These enterprises tend to be particularly vulnerable to disruption and even more so in emerging economies.

Supporting MSMEs is an effective tool for economic recovery and job creation. Some governments have recently announced near-term measures to support MSMEs and more interventions are expected, particularly in areas like job security and employment creation. These measures broadly fall into three categories:

Concessional financing Many small businesses require immediate access to funds to remain in business. Government-backed credit guarantees, injecting capital into public funds and encouraging financial institutions to increase credit or working capital for the MSME sector can help MSMEs maintain cash flow and operate during periods of disruption.
Tax reductions and grants Reducing taxes, fees, rental charges and electricity and water billing rates can lower the operational costs of MSMEs. Instituting deliberate measures, either through grants or offering tax relief and holidays targeted at hard-hit sectors, during periods of disruption as well as afterwards, will help to support economic regeneration and resilience.
Employment incentives and protection Employment incentives, such as subsidising wage bills, deferring contributions to social security funds and expanding health insurance can help MSMEs to maintain their workforces so that they can recover more quickly. Labour offices and employee unions should push to ensure that employees have appropriate job security.

Resilient economies require an inclusive approach that involves the private sector, international development partners and government. Working together, we can:

Prepare for future disruption and develop more resilient societies;
Provide affordable and accessible healthcare services;
Re-invigorate social schemes such as a universal basic income and other aspects of the social safety net, particularly for vulnerable groups and
Contribute to and lead the development and prioritisation of green infrastructure, businesses and economies.

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