Starting in Wuhan, the capital city of Hubei province in the People’s Republic of China, the Corona virus spread to other countries is damaging the world economy. Many countries have canceled flights, closed borders and ordered their people to stay at home. This has placed a heavy strain on the world economy. The United Nations reports that half a billion people fall into poverty because of the effects of the Corona virus.
A study published by the Ethiopian Economic Association said that if the virus lasts for a few months, many may become unemployed. A recent study by the Ethiopian Job Creation Commission found that if the virus lasts for six months, 60 percent of people in manufacturing may lose their jobs. It also said that three million people could lose their jobs in the service sector alone, where more than nine million people are employed.
In most of the world and in Ethiopia, the decisions made to protect against the corona virus are weakening the economy. The export of agricultural products from Ethiopia has stopped because the importing countries locked their doors. The influx of visitors from overseas has stopped, and direct investment has stopped.
Chief Executive Officer of the African Chamber of Commerce and Economist, Kibur Genna, claimed that public movement is restricted, and currently commercial activities related to food and beverage are weakened in Ethiopia. As a result, supplier companies of these service provider institutions have reduced or stopped their production. He said that the economic chain tied with this has weakened the entire economy. According to him, if the problem continues it is likely to cause damage by increasing unemployment and expanding poverty. Recalling the state of emergency issued by government in order to curb the spread of the virus, he said that the proclamation would put the public in fear; it may put off the weakened economy. To solve the problem, it is necessary to go back to previous economic and social activities so that everyone should do the job with the utmost care.
To stop the spread of the virus; Italy, France, England, and some other countries may have their own economic strength if they have to close their borders and make the decision to stay home, but not right. Like China, Korea, Sweden, Mexico, and Cuba, it is worth to keep the economic activity going by alerting the people to be cautious rather than making the economy to stop. And that Ethiopia should follow the path that these countries have followed, Kibur Genna said.
“Because, in the situation the economic activity is stagnant and the public is sitting at home, we are not sure whether the virus will stop its spread or not as we do not have any evidence. We must protect the elderly and people those with associated disease in Ethiopia, instead of the gross measures and decisions taken to be cautious that affect the general public’s future rather than improving,” he said.
In the present situation, Kibur Genna believes that the nation’s economy cannot be rebuilt with credit as the actions taken to prevent the spread of the virus have slowed the economic activity in other countries. Ports are closed, airplanes are not going anywhere, investment is stopped, public movement is restricted and trading is weakened. However, it is necessary to stimulate the local economy by familiarizing the public with the selected appropriate precautionary measures to prevent the spread of the virus, he said.
In order for the government to revive the economy, it has to take selective steps in the three major economic sectors agriculture, industry and service. Agricultural production, mainly for domestic consumption, does not have much market problems except the raise in price. Therefore, the government has to improve and strengthen agricultural activities.
In contrast, the service and industry sectors are almost locked down as a result of decisions taken to curb the spread of the virus. Most workers are sitting at home without work. Even though the government has ordered a paycheck to be paid, if the problem persists and the owner does not show willingness, the workers are likely to be dispersed.
While acknowledging the challenge of returning these two sectors to their previous positions, Kibur Genna has set two options to way out of the mess. First, People must have money in their hands and make shopping for the service providers to run their business efficiently.
To this end, governments like the United States give money to the citizens who stay at home; when the citizens get money, they go shopping and buy services. This can help the economy recover and improve. Although its effectiveness is not promising in the future, it is good if it is tried in Ethiopia too. But the difficulty he mentioned is identifying the eligible and non-eligible ones to give the money.
According to him, the other is products produced by the industry for export and domestic consumption. “Especially since most countries in the world where we export our products are closed due to the corona virus, it may not be easy to do so, as it may take time to restart the market.”
Although it is possible to produce and sell the products for local consumption in the country, the availability of imported inputs is risky and requires a suitable arrangement. “Thus, government needs to be able to make policy changes so that the economic activities of the service and industry sectors will revive.”
Adding: “Since the government in power gives priority for free markets, I do not believe that free markets will solve this problem. We are in a time government intervention is needed. The government should plan and set a strategy to give attention for the areas need priority,” he advised.
According to Kibur Genna, in the country’s current situation, the market cannot solve the problem. There’s no market right now; the market is down; it’s almost gone. Factories are not working in their full capacity or they are totally stopped; no new enterprise is being formed. Therefore, the government should take a time and set a plan that allows the economy to function. In order to make the plan operational, the government must reorganize its systems.
According to the economist, the government must play a leading role in reviving the economy. It must be able to consolidate its planning and implementation. It must focus on and support the industries that are effective. For example, if it is about a foreign trade, there should be strong support for the segments by identifying which product can earn better foreign currency, he recommend
The Ethiopian Herald May 26, 2020
BY BACHA ZEWDIE
