COVID-19 is a major global crisis that exposes the lack of resilience of an increasingly highly connected world, and it is certainly not going to be the last. Can it be an opportunity to rethink development and what governments are for, rather than simply fixing market failures when they arise? Can it be an opportunity to shift towards actively shaping and creating markets that deliver sustainable and inclusive growth?
A Global Crisis
The scale of the COVID-19 outbreak demonstrates that we are not prepared for large-scale pandemics. So, where are we today? On average, there are more than 1,000 new cases of COVID-19 every day with rapid exponential growth. The crisis has already shattered capital markets and the picture for economic growth in 2020 looks bleak. COVID-19 disrupted global supply chains and created poor trading conditions. SMEs are hardest hit in certain IsDB member countries and will deteriorate further. As a result, the world is set to lose 25 million jobs according to many studies.
The number of IsDB member countries affected by COVID-19 has reached 45 out of 57, with total confirmed cases reaching 27,579 people, 1,691 of whom have died as of 22 March 2020. As of today, we have received requests for financial support from more than 20 member countries.
Joint Action Needed
IsDB’s immediate response and call for joint action in order to support the MCs at different stages of the recovery trajectory has resulted in a comprehensive integrated response package worth up to $2 Billion. We call this package “The 3 Rs” (Respond, Restore, and Restart):
• Respond: This track delivers immediate action through South-South and North-South reverse linkage operations focused on a) strengthening health systems to provide care to the infected; b) building capacity in production of testing kits and vaccines; and c) building Pandemic Preparedness capacity, in cooperation with G20 Global Initiative;
• Restore: This track delivers medium term action through lines of financing for trade and SMEs to sustain activity in core strategic value chains, and to ensure continuity of the necessary supplies mainly to the health and food sectors, and for other essential commodities.
• Restart: This track delivers long-term action to build resilient economies on solid foundations and catalyze private investment by supporting economic recovery and countercyclical spending with a targeted $10 billion that aims to unlock $1 trillion worth of investments.
We will deliver “The 3 Rs package” through a unified country platform, in line with G20 principles. This will ensure coherence and coordination among key stakeholders. To that effect, IsDB will launch a joint global platform in May 2020 to track delivery within all country platforms and to mobilize resources. It will be available to partner MDBs.
IsDB will partner with many implementing agencies through the country platforms, including but not limited to: WHO and other UN Agencies, Philanthropy and international NGOs, OIC and other regional Agencies, as well as private contractors and suppliers.
As the current chair of the Heads of MDBs meetings in 2020, I am honored to highlight the ongoing joint COVID-19 Response Initiative led by IMF and WB with an anticipated package of $120 billion.
Can This be a Chance to do Development Differently?
I believe this is an opportunity to shift towards actively shaping and creating markets that deliver sustainable and inclusive growth, rather than continue limiting our role at the government and international community level to reacting to market failures.
We can proactively invest in creating and strengthening institutions that prevent crisis. We can coordinate research and development activities steering them towards public good. We can forge Public-Private-Philanthropy-People-Partnerships to ensure both citizens and economies are going to benefit.
We can learn from the lessons of the 2008 crisis by resisting to simply hand out unconditional bailouts rather than structuring them to Restart into a new economy — one that is focused on a 4.0 framework of growth — that is building capacity around the 4th generation of industrialization that uses technology to prevent global value chains disruption under such pandemics, while maintaining zero environmental footprint.
The COVID-19 storm will pass but the choices we make today will change our lives for decades to come. We call on world leaders to support all efforts in this direction and re-evaluate what threats deserve more of our individual and collective action. Let us not waste this opportunity to reflect and do development differently.
Dr. Bandar Hajjar
The views/opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of Al Bawaba Business or its affiliates.
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