Covid -19 Effects
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- ItemPoverty Consequences of COVID-19 Epidemic-Induced Lockdowns in Senegal: Extent and Implications from a Household Survey(African Economic Research consortium, 2020-11-29) Seck, AbdoulayeThis paper aims to assess the short-run distributional impact of the COVID-19 pandemic in Senegal by specifically looking at income losses, poverty and inequality impacts, and how the Government would go about offsetting them. Using a detailed household expenditure survey and two approaches that make various assumptions regarding the riskiness of income sources and types, the share of households losing income and the extent of those losses, the paper suggests that the welfare consequences are indeed very large. An increased share of households losing more and more income would lead to an estimated income loss of up US$ 263.3 million per month or 12.6% of monthly GDP, poverty rate reaching 72.3%, and a worsening in inequality. With survey evidence of the extent of losses across industries and income types, the paper shows that losses tend to emanate from rural areas as opposed to Dakar and other cities, and from industries such as transport/travel, financial intermediation and housing services (per capita losses), agriculture and personal services (absolute losses). The paper also provides an estimate of the monthly budget (US$ 246.6 million, or 11.8% of monthly GDP) in the form of adult-equivalent uniform transfer that would fully offset the poverty impact, conditional on a targeted mechanism that espouses the distributional impact across geographical locations.
- ItemPoverty and Distributional Effects of COVID-19 on Households in Kenya(African Economic Research consortium, 2020-11-29) Nafula, Nancy; Kyalo, Dennis; Munga, Boaz; Ngugi, RoseWith new infections on the rise, it is a race against time for governments to re-look at some policy interventions necessary to provide appropriate coping and recovery mechanisms to respond to the crisis. Informed by the most recent Kenya Integrated Household Budget Survey (KIHBS) 2015/16 data and assumptions on the possible effects of the pandemic on the income of individuals, this paper provides estimates of the poverty impact and simulations of the fiscal costs of mitigating the effects in Kenya. The analysis is informed by microsimulations and Foster, Greer and Thorbecke indices to analyze the effects of the pandemic on poverty. This study estimates that national absolute poverty in Kenya may have declined by 7.2 percentage points from 36.1% in 2015/16 to 28.9% in 2019 (pre-COVID). However, as a result of the pandemic, absolute poverty has increased to 41.9% in 2020, effectively wiping out progress made since 2015/16. This is because households have lost incomes from both labour and nonlabour sources amounting to 11.7% of Gross Domestic Product (GDP) or equivalent of Ksh 49.1 billion relative to estimated pre-COVID economic situation. Nationally, about 37.7% of the population (18.0 million people) experienced a loss of their labour and non-labour incomes. The key drivers of the decline in incomes are loss in employment and reduction in earnings majorly due to reduction in labour productivity and trade returns due to the April-June lockdowns. The major income effect to rural areas is from reduced remittances and gifts. To keep poverty headcount ratio at 28.9%, it would cost the Government of Kenya 6.3% of monthly GDP (Ksh 26.4 billion per month) at a uniform universal cash transfer of Ksh 773 targeting all poor households while a cash transfer targeting older persons at Ksh 2,000 per person would cost 0.9% of monthly GDP (Ksh 3.8 billion per month) to keep poverty levels at relatively lower levels of 40%. Other Government interventions that have worked to reduce poverty include reduction of SMEs turnover tax from 3% to 1% (40.1%) and exemptions/reductions in PAYE (39.5%) cost 1.3% and 2.1% of monthly GDP, respectively. In addition to the social protection approach and tax reliefs, easing restrictions while observing the containment measures, including encouraging flexible working policy, would allow households to earn an income...
- ItemCOVID-19 in Ghana: Consequences for Poverty, and Fiscal Implications(African Economic Research consortium, 2020-11-29) Issahaku, Haruna; Abu, Benjamin MusahThis paper estimates the poverty consequences of the COVID-19 pandemic and its fiscal implications in Ghana using a micro-simulation analytical approach applied to household level data collected in 2016/2017 by the Ghana Statistical Service. The results show that the poverty consequences are massive as poverty increased from a base of 20.5% to 34.0% and drove over 4 million pre-COVID non-poor into poverty. The poverty consequences are triggered by income losses of up to US$ 330 million and equalling 5.4% of monthly GDP. The pandemic has also worsened inequality as inequality rose from a base of 42.1% to 47.5%. The fiscal cost of a universal cash transfer potent enough to restore poverty to pre-COVID level is a monthly expenditure of US$ 186 million, which represents 3.1% of monthly GDP. COVID-induced interventions on water and electricity rebates for three months are less effective in reducing poverty. Disaggregated findings based on locality show varying depths of impact. The policy implications of these findings are important for appropriate interventions to tackle the consequences of the pandemic.
- ItemThe Short-run Impact of the COVID-19 Crisis on Poverty in Ethiopia(African Economic Research consortium, 2020-11-29) Yimer, Feiruz; Alemayehu, Mohammed; Taffesse, SeyoumA significant fraction of recently surveyed Ethiopian rural and urban households report income losses related to the COVID-19 pandemic. This study estimates how large these income losses are likely to be and the consequent impact on the poverty status of households. It finds that both the poverty headcount ratio and the poverty gap could increase significantly.