The way we view the world and so many concepts we held dear have been radically altered in 2020. As the recent cliché adage goes, things that were meant to change in decades have changed over the last few months, and in some cases even in days. Proposals that were once looked at as radical or even utopian are being tabled by several governments around the world in order to fight off the worst effects of the Covid-19.
The Social contract could have its terms fundamentally altered with people now being increasingly required to give up their privacy to ease testing and tracing and new proposals like anti-body based passports that could change so many facets of our lives instantly.
Developing countries have had to take a more cautious approach with regard to their plan for dealing with the virus. Many took measures early, instituting lockdowns and curfews that have largely been able to spare them the worst of the virus. Uganda has been under lockdown for close to two months and has so far reported no deaths and slightly over one hundred cases so far. Unfortunately, no one knows how long this crisis is going to last. No one knows exactly how it is going to impact our economies, or how things will look even three months from now. But the effects of the economy grinding to a halt however can be felt instantly, and many of the people part of the country’s large informal sector were almost instantly left with no incomes and very little in savings to live on for an undeterminable period of time.
These are unprecedented times, and to solve problems like this we may need to dig deeper and get new solutions to help the people who are feeling the full brunt of the economic downturn. The government has done a commendable job in preventing the spread of the virus and equipping itself in being able to handle it. The next limb of the solution to the virus is going to be securing livelihoods for people because without such a guarantee in the months to come, people will grow tired of the lockdowns and quarantines and they will increasingly become harder to enforce. Therefore in order to control the spread of the virus, the government should do more than just supply posho, but should also reassure people that financial support will be available as long as it is necessary.
Given these circumstances, the government should introduce a Universal Basic Income (UBI) to help the most vulnerable and affected by the effects of the economic slowdown across the country. Universal Basic Income is a cash transfer given to all the people of an area with no conditions attached as to how they should use it. While our government may be far from being capable to give us all money on these terms, in light of the conditions created as a result of the virus the government should consider a variant of the UBI, Ultra-Universal Basic Income (UUBI). This is a regular cash transfer that is just enough to enable people to survive.
Basing on their book Good Economics for Hard Times, 2019 Noble Prize-winning economists Abhijit Banerjee and Esther Duflo argue that, “The virtues of a UUBI are its simplicity, transparency, and its assurance that nobody will starve. It avoids the problems of many welfare systems that are designed to exclude the “non-deserving”, even at a cost to the needy. During a pandemic, when governments need to help as many people as quickly as possible, the simplicity of a UUBI could be lifesaving. Reassuring people that nobody will be excluded from subsistence aid also limits the feeling of existential foreboding that so many individuals in poor (and not so poor) countries are currently experiencing.
Special times call for special measures, and these initiatives can be financed through the government working with international financial institutions and richer countries to reschedule debt obligations and finance many of these initiatives. Already, efforts by the G7 and European Union have eased debt pressures on countries for this year and this will make it easier for governments to direct financing towards ensuring the wellbeing of the population for this time period. Uganda has received several grants and recently a large loan from the International Monetary Fund to aid in economic recovery. These measures, coupled with increased government spending is going to be crucial for quick economic recovery.
The government may need to accept a larger short term budgetary deficit in order to ensure that the majority of the population is catered for throughout the period the lockdowns subsist. The President has been keen to ensure that core sectors and industries keep operating. As the lockdowns ease and production increases, providing an ultra- Universal Basic income will be crucial to shore up the unexpected decline in earnings and ensure that there is a demand for the goods that the industries have been producing and will continue to produce. Our government has been cautious to avoid a debt crisis and conventional macro-economic wisdom and fiscal prudence should not be jettisoned to the winds with this approach.
There will be a need for careful planning based on how the effects of the virus manifest and a long term strategy on how the lockdown will gradually be lifted. However, considering the nature of the spread of the virus lockdowns may increasingly become common to prevent our health systems from being overwhelmed leaving many people more and more vulnerable each time.
A project of this magnitude could be subject to large levels of corruption, and the government can tackle this by using the already existent mobile money infrastructure to send the money directly to its intended recipients. This way, the money will be easier to track and kept safe from being largely misappropriated.
Lessons on such a project can be drawn from Togo, which recently implemented its own UUBI targeting all informal workers around the greater region of Lome, who are above 18 years old and have a valid ID and can prove they have lost their income due to the Covid-19 response are eligible to benefit from the scheme. Upon meeting this criterion, they then start receiving monthly installments to cater for food and basic utilities.
We are in extraordinary times, and the usual tools in the box for solving the problems we face now and are about to encounter may not be enough. However, this is a short-term solution that provides an immediate reduction in the effects of a loss of income brought about by the virus and should be used in conjunction with other economic development schemes to achieve a sustainable solution to inequality and poverty that may arise as a result of the virus.
We need to quickly develop and tailor new solutions to cater to the problems we face and prevent this new war against the corona virus from damaging the progress we had made on other fronts, such as the wars against poverty and inequality and prevent the present crisis from developing into a future catastrophe.