The coronavirus pandemic is undoing decades of progress in poverty reduction as millions of people’s livelihoods are threatened in the world’s poorest countries.
Since 1990, more than 1bn people around the world have escaped extreme poverty, according to the World Bank, which defines it as living below $1.90 per person per day.
But nearly 100m people could become unable to fulfil their basic needs this year as they fall between the cracks of inadequate welfare systems, the World Bank forecasts. It has warned that acute hunger could double in 2020, affecting 260m people.
Some 73 of the world’s poorest countries which borrow from the Bank on sub-market terms — generally regarded as the poorest and most economically vulnerable nations — can pause debt repayments to official creditors for the rest of this year under a deal agreed by the G20 group of leading nations in April, giving them some financial breathing space.
Many workers in those countries do not have the same headroom. People who have worked hard to build businesses and improve their living standards face a potentially catastrophic loss of livelihood. They must wait until the pandemic ebbs to see whether their incomes will return.
Edil Mendez
Entrepreneur, Honduras
A hat seller walks on West Bay Beach at Roatán, Honduras. © William Berry/Alamy
Edil Mendez’s tourist-dependent business faces ‘difficult decisions’Edil Mendez moved to the Honduran holiday island of Roatán with his family when he was just four, from the poor north central department of Yoro.
At 28, the former firefighter is now a successful entrepreneur, running a small hospital for tourists, plus land and air ambulances. He earns enough to support his four children, his four siblings and his mother. But Covid-19 has wiped out the tourist trade and it could ruin him.
“I’m giving it until November. If things don’t get better by then, I’ll have to make some difficult decisions,” said Mr Mendez, referring to the peak holiday season in the popular destination for US, Canadian and European winter sun-seekers. “There’s a lot of risk of being hard-up again, and that’s very tough to face. I could lose years of work in a matter of months.”
He has already had to close his three-bed hospital and lay off six doctors and four other staff. The air ambulance is working at just 10 per cent of capacity. “If things continue like this, we’ll have to close this business too,” he said.
Corruption is rife in Honduras, and Mr Mendez does not trust the government not to siphon off aid for coronavirus-hit businesses. Unlike other parts of Honduras, Roatán is not plagued by gang violence but the island’s economy is wholly dependent on tourism, and many people have lost their jobs. As a result, he said, “there are armed robberies in broad daylight . . . I’ve never seen so much crime”.
The local economy began to grind to a halt in January. Since then Mr Mendez has not been able to meet the payments on his house, although he feels “blessed” not to have a bank mortgage but to be buying direct from the owner, who is not pressing him to pay.
“I don’t want to go back to how it was when I was a child — we didn’t have much money,” he said. “I’ve worked so hard to give my children a better future and now we risk losing it all.”
Deborah Dofernyo
Housekeeper, receptionist and saleswoman, Ghana
Deborah Dofernyo’s salary from the guesthouse she works at is keeping her and several relatives afloat
Women wearing face masks chat at the Nima market in Accra, the capital, as Ghana lifts partial lockdown © Francis Kokoroko/ReutersDeborah Dofernyo had only been working as a housekeeper and receptionist at an Accra guesthouse for six months when the first coronavirus case appeared in Ghana.
Business had already begun to slow as countries began to close borders and Ghanaians started travelling less. A week later Accra was put under partial lockdown and the guesthouse closed. The 27-year-old was luckier than most of Ghana’s informal workers — her employer continued to pay her 100 cedi ($17.30) weekly salary. “[That means] I can pay rent,” she said.
But Ms Dofernyo supports her mother and grandmother, who are both infirm, as well as five younger cousins. She had been saving up to send herself to pharmacy school by selling underwear door to door — a business that often doubled her weekly salary.
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The clothing was imported, mostly from China, and when the ports closed the markets dried up. Now that they have reopened, she could restart the business, Ms Dofernyo said, but she has spent all her savings. “Since the lockdown the small profit I have made, and even my capital, I have used everything,” she said.
An uncle who worked in mining sent her family some money but lost his job because of the pandemic.
But she says that the lockdown “was the right thing to do because once there is light, there is hope”. Ghana has recorded just 66 deaths so far.
“If we are safe from the virus we can continue our businesses . . . so even though it has affected me badly, it was for our own good,” she said.
And she hopes to get her business off the ground again in future. “Now I will have to wait some time to get some small money to start again,” she said. “I don’t know how long it will take but by god’s grace, I will surely start again.”
Sherzod Dzhalliov*
migrant Construction worker, Tajikistan
Hundreds of migrants from Central Asia have been stranded in Russia, unable to return home as countries closed borders and airlines cancelled flights © Alexander Zemlianichenko/AP
Construction workers walk in front of Christ the Saviour cathedral in central Moscow © Alexander Nemenov/AFP/GettySherzod Dzhalilov left his village in northern Tajikistan aged 21 for a better life in Russia, where he hoped to earn enough money to support his family back home.
But in late March when Moscow launched one of the world’s strictest coronavirus lockdowns — not allowing residents so much as to leave their house without permission — 32-year-old Mr Dzhalilov had to stop sending money back home, and began to burn through his savings to support his wife and daughter in their small suburban flat.
“I’m not sure what to do about this,” he said. “I had a bit saved up, but it’s all gone now. Lots of businesses are closing and we’re not getting any state support.”
Mr Dzhalilov, who asked the Financial Times not to use his real name as he was concerned that it could attract the attention of the Russian police, is one of an estimated 1.2m guest workers in Russia from Tajikistan, one of the world’s most remittance-dependent countries.
The $2.6bn they send to their Central Asian home, which has a population of just 9m, amounts to more than a quarter of Tajikistan’s gross domestic product, according to the World Bank.
Migrant labourers are some of the most vulnerable to Russia’s pandemic restrictions. Though employers got tax breaks to keep staff on payroll, workers like Mr Dzhalilov were furloughed after Moscow shut down construction sites. As a result, the World Bank expects GDP growth in Tajikistan to fall from 7 per cent in 2019 to an estimated 1 per cent in 2020.
That could freeze progress in tackling poverty in Tajikistan. Poverty rates fell by an average of just over 3 per cent of the population yearly from 1999 to 2015, but progress is likely to stall this year.
Mr Dzhalilov considered returning to Tajikistan but found himself stranded because of border closures. Though Russia extended migrants’ right to stay until September regardless of visa status, Mr Dzhalilov said officials and police had fined him for violating regulations. “The law doesn’t work. They just stop you on the street for looking Central Asian,” he said.
Since Moscow allowed construction sites to resume work in early June, Mr Dzhalilov has resumed his two-and-a-half hour commute. But with cases in Russia still running at nearly 8,000 daily, he is worried it may not be for long. “There could be a second wave and they’ll shut everything down again.”
*not his real name
Asmeret Andebirhan
Psychiatrist, Ethiopia
Ethiopian medical professionals attend training in Addis Ababa, Ethiopia © Michael Tewelde/AFP/Getty
A man pushes a handcart past closed shops in Addis Ababa, Ethiopia © Maheder Haileselassie/ReutersEven before the pandemic, running a private psychiatry practice in the Ethiopian capital of Addis Ababa was a challenge. Many could not afford the services of Asmeret Andebirhan, a 34-year-old psychiatrist, and insurance does not cover mental health treatment outside government hospitals.
Coronavirus has only made things harder. Income at her clinic, which employs 18 people, has halved. “We are going to try to maintain [the] business but it’s a challenge,” she said. “The impact is going to be huge, including on mental health.”
Many patients have stopped coming because they are fearful of catching the virus, leading some to relapse. Meanwhile, social distancing has made it more difficult to check patients into the 10-bed clinic and to run group therapy sessions for outpatients.
Ethiopia has so far avoided a complete lockdown, but the pandemic has taken its toll on mental health. “Demand [for services] is increasing but you can’t tackle it as you want to because you are also affected,” Dr Asmeret said.
She specialised in mental health after she was assigned to rural Tigray where she was struck by the virtual absence of psychiatric care. After establishing the country’s first national centre for substance addiction there, she founded her clinic in Addis Ababa five years ago. Now, as a result of Covid-19, she has moved much of the clinic’s treatment online, with sessions conducted over Skype or WhatsApp. “I want to take this challenge as an opportunity,” she said.
The government expects the economy to grow at 3 per cent this year, but that is a far cry from the near-double-digit expansion that over two decades has transformed one of the world’s poorest countries into one aiming for middle-income status by 2025. Rising food prices are also piling pressure on to household budgets.
Dr Asmeret is hopeful that her business can bounce back as the disease recedes, but she worries that the pandemic could set back the fortunes of others, including the country’s nascent middle class. “Both the mental health and economic impact could leave a huge scar,” she said. “I don’t think it will take months to recover. It could take years.”
Mujahid Ali
Courier and driver, Pakistan
Mujahid Ali, a rider for courier Bykea, has seen his income dwindle
Pakistani vendors sell vegetables along a street in Islamabad during a nationwide lockdown © Farooq Naeem/AFP/GettyIn the two months since Pakistan ordered a lockdown to combat coronavirus, Mujahid Ali’s income has plummeted.
For the past two years Mr Ali has worked as a rider for ride hailing and package delivery service Bykea, which relies on bikers to navigate the city’s congested streets and narrow alleyways. He earned enough to buy small luxuries, including a new smartphone and more clothes for his wife and son.
But as the Pakistani government struggles to overcome the economic shock caused by the pandemic, Mr Ali and others like him have suffered. “My last proper income for a month was Rs40,000 ($240). Today, I would be lucky to make even a third of that,” he said. “Nobody could predict the world closing down so soon.”
Across Islamabad, hundreds of motorcycle couriers and drivers of taxi hailing services have been hit by the disruption. Pakistan’s central bank expects gross domestic product to contract by 1.5 per cent in 2020, from 3.3 per cent growth last year.
Mr Ali needs his mobile phone for work, so with his dwindling income he prioritised paying off its outstanding dues of Rs5,000 in unpaid instalments. He had hoped to step up from his motorcycle to a car, which would open up a broader range of work opportunities, but that is off the cards for now.
“For that to happen, I need to make more money,” he said. “Like everyone else I am hoping for coronavirus to go away so that I can make more money.”
Reporting by Valentina Romei, David Pilling, Jude Webber, Neil Munshi, Max Seddon and Farhan Bokhari
Source: Economy - ft.com
