Al Jazeera

Al Jazeera 5 Apr 2020

Can healthcare in poor nations withstand coronavirus?


The World Bank and the International Monetary Fund are calling on creditor nations to provide debt relief to the world's poorest nations amid the coronavirus pandemic.

The United States and Federal Reserve have, so far, pledged $6 trillion, easing the pressure on poorer nations who do not have the same kind of financial firepower. Health services in rich nations are being stretched by this crisis and developing and poor nations will require support.

The World Bank is making available $12bn to support health and primary care services in low- and middle-income nations. And the IMF has made $50bn available to support emerging markets.

Rising powers are also under pressure. India, for example, where 1.3 billion people are under lockdown, spends 3.7 percent of its gross domestic product (GDP) on healthcare. That is less than China, which spends almost 5 percent, according to data from the World Bank.

The next hot spot for the pandemic could be Africa. According to the Economist, more than half of African countries are above the IMF's recommended limit for public debt.

Ethiopia's Prime Minister Abiy Ahmed has called on the G20 to provide $150bn in emergency funding for the continent.

Andrew Farlow, a senior fellow at the Oxford Martin School, which is part of the University of Oxford, explains there are a number of factors that impact whether people isolate themselves to keep the number of infections low.

"You have to tell people to do things that are actually, to some degree, financially damaging to them, and you need a system to protect them."

Rich nations picking up paycheques

Now, as more than two billion people go into lockdown, many living from paycheque to paycheque and those working in the gig and informal economy are about to lose their livelihoods.

The number of people filing for unemployment benefits rose to more than six million people in the United States - the biggest surge on record.

Rich nations have stepped in to cover lost paycheques. As part of the $2.2 trillion stimulus, many Americans will receive up to $1,200, plus $500 per child.

In the United Kingdom, the government has offered to pay 80 percent of each worker's monthly pay up to 2,500 pounds ($3,065). And in Hong Kong, residents were sent cheques for $1,200 each.

When central banks print money it is called "helicopter money", an idea first introduced in 1969 by Nobel Prize-winning economist Milton Friedman. The idea is to get money directly into the hands of consumers and is seen as a better way to revive an economy.

Alfie Stirling, head of economics at the New Economics Foundation, tells Al Jazeera that all response from government is financed through debt, whether it be loans from a bank or providing income to people, and is very less likely to be "inflationary" at this moment because people are less likely to spend now.

"In the median term, if it were to be inflation, that's actually a sign of the economy warming up again and recovering and central banks are able to adjust interest rates to absorb that but in the short-time, the real crisis is that we don't have enough inflation, we don't have enough standing pressure in the economy because people have lost their incomes."

While the number of COVID-19 deaths and infections in India has so far remained relatively low, despite the enormous billion-plus population. Authorities say they are ramping up testing, as the capital Delhi and financial hub Mumbai emerge as hotspots. And Prime Minister Narendra Modi is under pressure to extend a nationwide lockdown due to end next week. But the coronavirus and the lockdown that is meant to contain it have placed India's poor between a rock and a hard place.
May 1 was an important day for the world's poorest nations. It was the day the rich club of G20 nations gave debtors a payment holiday until the end of the year, giving developing nations more headroom to pay for healthcare during the pandemic.

Despite more than 100 countries applying to the International Monetary Fund for emergency aid, the IMF and World Bank have not been so generous, insisting nations keep repaying interest on debt. The IMF had only $200m available in a catastrophe relief fund for the world's poorest countries.

Being Africa's largest oil producer is no guarantee to riches. Nigeria has received $3.4bn from the IMF. With debt as a proportion of its economy at about 30 percent, you would think the country would not get into trouble. But Nigeria is dependent on oil for 90 percent of its export earnings, and with crude prices cratering it has little room to service debt.

Other nations have precarious finances from Argentina to Ecuador, Lebanon to Venezuela. And there are calls for the private sector - an industry worth $22 trillion - to give countries a payment holiday during this pandemic.

In an op-ed in the Financial Times, Saudi Finance Minister Mohammed al-Jadaan said private institutions are owed $18bn by the world's poorest nations this year. If they were to suspend half that amount, that would provide an additional $9bn to fight COVID-19.

Rodrigo Olivares-Caminal, professor of banking and finance law and an expert in sovereign debt at Queen Mary University in London, shares his thoughts on whether it is time big finance gave poor nations debt relief to fight the pandemic.

Sharia-fintech and its bid for a big share of Indonesia's banking

Ramadan is a time not only for fasting in the Muslim world but also for charitable giving. Tech startups are finding ingenious ways to help ardent followers to part with their donations via a multitude of apps.

This is particularly the case in Indonesia, the most populous Muslim-majority country with 270 million people, half of whom lack bank accounts but do have mobile phones.

But there is room for growth. All forms of Islamic banking account for just 6 percent of Indonesia's $580bn in banking assets.

Hoping to get a bigger share of the Islamic finance market in Indonesia is Dima Djani, the chief executive of peer-to-peer lender ALAMI. Djani discusses Indonesia's banking with Al Jazeera.

Are the human rights of garment workers under threat?

The pandemic has had a disastrous impact on Southeast Asia's garment manufacturing hubs.

A million workers have been laid off, according to risk consultancy Maplecroft.

Forty million garment workers are employed by the industry in countries such as Cambodia, Bangladesh, Indonesia, Myanmar and Vietnam. It is an important source of income. For example, the total value of exports for Bangladesh is $32bn.

The Bangladesh Garment Manufacturers and Exporters Association says factories have reported a loss of $3bn in orders. In Cambodia, garment workers are to be paid $70 a month from the government and employers. But that is 37 percent short of the current minimum wage.

Despite some factories reopening in Bangladesh, there are still fears that not enough is being done for people who live from pay cheque to pay cheque. And there are real fears that labour rights could unravel.

Sofia Nazalya, a human rights analyst at Maplecroft, shares her thoughts on whether the human rights of garment workers are under threat.
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