The Coronavirus will not disappear with the end of the lockdown. A vaccine will take months if not years, to be developed, tested and successfully rolled out. We therefore need to learn how to go back to business in the presence of the coronavirus.
The social changes brought by the Coronavirus are not all negative, but there is no doubt about the magnitude of the challenges ahead. Both the pace and depth of the current economic crisis are unprecedented.
As noted by Professor Nouriel Roubini, the financial crisis in 2008 and the Great Depression took three years to play out, while the Corona virus related economic decline has taken only three weeks.
McKinsey estimates the cut to African GDP between 3 to 8 percentage points, and it is not yet certain, when we will hit the bottom of the recession.
The Coronavirus crisis started-off as a supply shock by restricting the capacity to produce. In Africa, where the majority live from the informal sector, this translates immediately into total loss of revenues and therefore demand shock.
Against this background, Professor Ricardo Hausmann warned about the proportional correlation between the duration of a lockdown and the intensity of the ensuing economic crisis.
The hard choice between a short lockdown with many deaths and long lockdown followed by an economic collapse leads to an impasse.
Fortunately, Rwanda has decisively cut the inflow of new cases and is successfully mobilizing funds to bridge the shortfall of revenues. This allows Rwanda to offer good medical treatment for identified cases, while a command centre is successfully tracing cross contamination.
The question for Rwanda is therefore how to go back to business while preventing new infections to multiply.
A crisis so profound always brings up a new world, remote first and low touch economy will be the new normal as noted by the Board of Innovation. While it is too early to predict the impact of the Coronavirus in Rwanda, one can already identify key topics when resuming business activities.
Preventing infections to multiply
First, we need to go back to business with the imperative of data collection in mind to improve traceability. Data collection on people’s movement implies app based public and private transport with cashless payments.
The decision by financial institutions to lower cashless transaction costs during lockdown should therefore be normalised.
Second, we need to continue testing people as they go along their daily work. We therefore need digitally enabled company health workers to test at least the temperature of employees and in some cases apply Coronavirus test kits.
Fortunately, even the informal sector in Rwanda is organized in cooperatives and there is strong local government presence. A medical focal person in each company or cooperative can collect data and be held accountable to hygiene norms. With the Coronavirus, companies are the new community health workers.
Boosting the economy through green and digital industrialization
Third, we cannot resume economic activities by only adopting a cost cutting approach, because this would further shrink economic activity. The disruption of global supply chains has created an indirect protection for local manufacturing and at the same time increased the relevance of digital services.
In terms of manufacturing, there is a low hanging fruit with medical equipment that are now restricted for exports. The same strategic importance goes to Agro-processing, especially efforts to increase shelf life of food.
Nonetheless, manufacturing is always capital intensive and relies on international value chains. Incidentally, the Coronavirus has given headwind to the African Continental Free Trade Agreement by demonstrating the relevance of the diversified intra-African market.
Furthermore, the Coronavirus has created a very good environment for industrial policymaking, it is no longer taboo to protect local industries or for the Government to invest.
The African private sector is also now better organised, for example, the Africa Association of Automotive Manufacturers is working closely with Governments to create a Pan African Automotive Value Chain.
Africa can learn a lot from the Chinese Automotive success story to create wage-based labour. China came in last but is now at the forefront of electric cars. Can Africa come together, just like oil producing countries, and create an organisation to regulate the sustainable supply of electric mobility relevant minerals? A potential good outcome of the Coronavirus crisis can be the adoption of AfCFTA value chains.
In terms of Innovation, it is more about the quality of education to bring out innovative minds. Here again, the Coronavirus has confirmed fundamental shifts. Education is shifting from a mass consumed service towards a tailor made individually consumed digital service.
The gamification of education comes with the benefit of ensuring the same quality of education in certain topics. However, it does not mean the economy of good teachers. To the contrary, pedagogic skills are needed to transmit values and critical thinking in times of open-source knowledge.
The coronavirus is no longer just a health or economic crisis but an epoch-defining event. We will not go back to the world, as we knew it before the crisis.
We shall rely on the strategic choices made in Rwanda with foresight around digital services, Made in Rwanda and AfCFTA, to create the new world. Indeed, as President Kagame often says, ‘we should never waste a crisis’.
The views expressed in this article are of the author.