Coronavirus offers chance for us to do development differently
The coronavirus disease (COVID-19) is a major global crisis that exposes the lack of resilience in an increasingly highly connected world — and it is certainly not going to be the last. Could it be an opportunity to rethink development and what governments are for, rather than simply fixing market failures when they arise? Could it be an opportunity to shift toward actively shaping and creating markets that deliver sustainable and inclusive growth?
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 has disrupted global supply chains and created poor trading conditions. Small and medium-sized enterprises (SMEs) are the hardest hit in certain Islamic Development Bank (IsDB) member countries and their situation will deteriorate further. As a result, the world is set to lose 25 million jobs, according to one study.
So far, 45 out of 57 IsDB member countries have been affected by COVID-19, with the total confirmed cases reaching 27,579 people, 1,691 of whom have died, as of Sunday. We have already received requests for financial support from more than 20 member countries.
The IsDB’s immediate response and call for joint action in order to support the affected member countries 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).
The respond track delivers immediate action through south-south and north-south reverse linkage operations focused on: Strengthening health systems to provide care to the infected; building capacity in production of testing kits and vaccines; and building pandemic preparedness capacity in cooperation with the G20.
Restore delivers medium-term action through lines of financing for trade and SMEs to sustain activity in core strategic value chains, and to ensure the continuity of necessary supplies, mainly to the health and food sectors, and for other essential commodities.
The restart 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 target of $10 billion. This aims to unlock $1 trillion-worth of investments.
We will deliver this package through a unified country platform, in line with G20 principles. This will ensure coherence and coordination among key stakeholders. To that effect, the IsDB will launch a joint global platform in May to track delivery within all countries and to mobilize resources. It will be available to partner multilateral development banks (MDBs). The IsDB will partner with many implementing agencies through the country platforms, including but not limited to: The World Health Organization and other UN agencies, philanthropic and international nongovernmental organizations, the Organization of Islamic Cooperation 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 the International Monetary Fund and World Bank, with an anticipated package of $120 billion.
The COVID-19 storm will pass, but the choices we make today will change our lives for decades.
Dr. Bandar Hajjar
I believe this is an opportunity to shift toward actively shaping and creating markets that deliver sustainable and inclusive growth, rather than to continue limiting our role to the government and international community levels and reacting to market failures. We can proactively invest in creating and strengthening institutions that prevent crises. We can coordinate research and development activities, steering them toward public good. We can forge public-private-philanthropic partnerships to ensure both citizens and economies are going to benefit.
We can learn from the lessons of the 2008 crisis by resisting simply handing out unconditional bailouts, rather than structuring them to restarting a new economy — one that is focused on a 4.0 framework of growth. That means building capacity around the fourth generation of industrialization that uses technology to prevent global value chain disruption due to pandemics, while maintaining zero environmental footprint.
The COVID-19 storm will pass, but the choices we make today will change our lives for decades. 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 is president of the Jeddah-based Islamic Development Bank Group.