{"id":26155,"date":"2020-04-24T07:38:47","date_gmt":"2020-04-24T03:38:47","guid":{"rendered":"http:\/\/www.mauritiustimes.com\/mt\/?p=26155"},"modified":"2020-04-24T08:18:47","modified_gmt":"2020-04-24T04:18:47","slug":"mauritius-heads-into-coronavirus-storm-with-strong-social-welfare-buffers","status":"publish","type":"post","link":"https:\/\/www.mauritiustimes.com\/mt\/mauritius-heads-into-coronavirus-storm-with-strong-social-welfare-buffers\/","title":{"rendered":"Mauritius heads into coronavirus storm with strong social welfare buffers"},"content":{"rendered":"

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Mauritius preserved its social welfare system even during structural reforms in the 1970s. It is now better prepared than most nations for the health and economic impact of Covid-19<\/em><\/span><\/h4>\n

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\"\"Mauritius\u2019 social welfare system is relatively stronger than most nations\u2019\u00a0Getty Images<\/span><\/span><\/span><\/p>\n

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The global economic costs of the Covid-19 pandemic will be massive, with the International Monetary Fund\u00a0forecasting<\/a>\u00a0the worst global recession since the\u00a01929 Great Depression<\/a>. In Africa, the epidemic is\u00a0gaining momentum<\/a>. The continent is bracing itself for an unprecedented sanitary and economic crisis.<\/span><\/p>\n

The World Bank\u00a0estimates<\/a>\u00a0that the continent\u2019s pace of economic growth may drop from 2.4% in 2019 to -2.1% to -5.1% in 2020, the first recession in 25 years. The continent could face a balance of payments shortfall in\u00a0excess of $100 billion<\/a>\u00a0in 2020. A\u00a0balance of payments<\/a>\u00a0records a nation\u2019s transactions with the rest of the world. These transactions include imports and exports as well as capital inflows and outflows.<\/span><\/p>\n

The nations at the centre of the pandemic \u2013 China, the UK, continental Europe and the US \u2013 are grappling with both supply and demand shocks. These are Africa\u2019s major trading partners. Countries in\u00a0sub-Saharan Africa<\/a>\u00a0are therefore seeing a huge drop in demand for their primary commodities. Their manufacturing and tourism industries have also seen substantial disruptions due to restrictions on the transportation of goods and people.<\/span><\/p>\n

Many African countries are dependent on food<\/a>\u00a0and\u00a0pharmaceutical <\/a>imports. Some also rely on overseas\u00a0remittances<\/a>\u00a0and\u00a0tourism<\/a>\u00a0for foreign exchange earnings. This means more hardship is yet to come.<\/span><\/p>\n

Mauritius\u00a0has not been spared<\/a>\u00a0from Covid-19. The country has been under national confinement since 20 March, a curfew since 24 March. As it is a globally interdependent economy, the impact on the country has been unparalleled. The first estimates point to\u00a0a GDP contraction<\/a>\u00a0of 3% to 6% in 2020. The crisis is expected to spread well into 2021. Government\u00a0has committed<\/a>\u00a0close to Rs.12 billion (US$300 million) worth of measures in support of businesses and workers. A further fiscal stimulus will be necessary to weather the storm.<\/span><\/p>\n

But Mauritius heads into the epidemic on a stronger footing than many sub-Saharan Africa countries. The country\u2019s solid social protection system provides a strong foundation which government can use to expand support to the most vulnerable Mauritian households.<\/span><\/p>\n

Stronger welfare buffers<\/strong><\/span><\/p>\n

Mauritius had a strong\u00a0Fabian socialist<\/a>\u00a0inspired leadership at independence. It is therefore one of the few countries that successfully preserved\u00a0its welfare state<\/a>\u00a0throughout its\u00a0stabilisation and structural adjustments programmes<\/a>\u00a0in the 1980s. Today the country boasts a social protection system that is broad and relatively extensive in coverage.<\/span><\/p>\n

Mauritius\u2019 entrenched social protection culture meant that government promptly acted to\u00a0minimise job losses<\/a>\u00a0from the 2008 global financial crisis. Its welfare system enabled timely policy responses, helping minimise the socio-economic impact of the crisis.<\/span><\/p>\n

Mauritians benefit from\u00a0universal and free health coverage<\/a>,\u00a0free education <\/a>from the age of five,\u00a0free higher education<\/a>, an\u00a0unemployment benefit scheme<\/a>\u00a0that embeds provisions for informal labour, a minimum wage (US$258 per month),\u00a0a 13th month salary<\/a>, a range of\u00a0social assistance schemes<\/a>\u00a0for the most vulnerable and\u00a0a universal pension scheme<\/a>\u00a0(US$228 per month).<\/span><\/p>\n

The latest available\u00a0data<\/a>\u00a0shows that Mauritius allocated 9.3% of its GDP to social protection measures. The average across sub-Saharan Africa is 4.5%. Only South Africa, Botswana, Djibouti and Lesotho spent more than 6% of GDP on social protection.<\/span><\/p>\n

With\u00a03.4 hospital beds<\/a>\u00a0per 1,000 population, Mauritius is better equipped than the UK (2.8 beds per 1,000 population) and this contrasts with the sub-Saharan Africa average of 1.2 beds per 1,000 population. The fight against Ebola and HIV\/AIDS enabled some countries to accumulate valuable expertise in containing the spread of contagious diseases. Nevertheless most health systems in sub-Saharan Africa remain\u00a0deeply fragile and massively underfunded<\/a>.<\/span><\/p>\n

Primary commodity exporters with\u00a0limited social protection<\/a>\u00a0and limited\u00a0cash transfer programmes<\/a>\u00a0in central and western Africa will probably be the hardest hit. With limited fiscal space they will urgently require international funding and support in implementing immediate COVID-19 targeted solutions.<\/span><\/p>\n

With the pandemic still unfolding, African finance ministers have called for\u00a0international fiscal support<\/a>\u00a0and a coordinated policy response to address the sanitary and economic impacts.<\/span><\/p>\n

Calls for reform<\/strong><\/span><\/p>\n

There is debate as to whether the Mauritian welfare state should have undergone more fundamental reform in terms of quality of delivery, especially in the areas of health and education. The government\u2019s vision of becoming a high-income economy by 2030 may have obstructed the need to focus on sustainable outcomes rather than quantitatively measurable growth objectives. These concerns are legitimate and will need to be addressed.<\/span><\/p>\n

But for now, Mauritius can count on its existing welfare system as it crosses the coronavirus desert. As it battles the health and economic impacts of the pandemic:<\/span><\/p>\n