Greater vaccine uptake to expedite economic recovery
By Ruusa Nandago
FirstRand Namibia Economist.
There cannot be a dispute about the wide-ranging implications of the ongoing Covid-19 pandemic. Lives have been lost and livelihoods have been ravaged over the past two years.
Public health measures have proven to be effective. However, it is a well-documented fact that these are not sufficient to curb the continued spread of the virus. A critical component of the world’s arsenal against the pandemic is vaccination. Science has been vindicated in this regard.
Unfortunately, the uptake of vaccines that help protect against severe disease, hospitalisation, intensive care unit (ICU) admission and death has been particularly slow. In Namibia, less than 30% of the eligible population, is believed to be fully vaccinated. This needs to be seen within the context of close to 4000 Namibians who have died because of the pandemic. Additionally, a recent study found that close to 15 000 jobs had been lost in the formal economy alone as a result of public health regulations that were enforced to arrest the situation.
This is a situation that should be of concern to every Namibian. The potential for economic recovery amidst and post-Covid-19 is said to be related to vaccine uptake in a country.
In 2021, the International Monetary Fund (IMF) proposed that the pandemic could end if 40% of the population getting vaccinated by the end of 2021 and 70% by mid-2022. While some countries have made significant progress towards achieving this target, there remain large variations in terms of vaccine coverage – with African countries recording the lowest vaccination rates. Namibia, in particular, lags far behind its target of attaining herd immunity by March 2022.
Achieving a high level of vaccine coverage is not only key to ending the pandemic but is also critical to getting economies across the world back onto an upward growth trajectory in the short term. In other words: vaccine policy is economic policy. This is because low vaccine coverage brings about risks of virus mutations and new variants which could lead to further variant-induced waves of infections. This was witnessed in Namibia during the devastating Delta third wave experienced in the June-July period of 2021. Furthermore, there remains a risk that new variants may become vaccine resistant, thus delaying the end of the pandemic and consequently limiting the potential for economic growth.
The emergence of the Omicron variant reminds us that additional variants and further waves of infections bode ill for Namibian tourism as they trigger travel bans and red-listing which consequently lead to cancellations of flights, accommodation and tourist activities. Tourism, as we know, was a significant contributor to the country’s gross domestic product (GDP) before the onset of the pandemic.
In addition to this, severe waves of Covid-19 could necessitate the re-introduction of strict regulations which limit movement. This, by implication, disrupts economic activity which has detrimental implications for other sectors in the economy, particularly those that are consumer-facing. This start-and-stop approach to the economy could lead to a further deterioration in consumer and business confidence. Confidence levels are already at historically low levels as evidenced by data on credit extended to the private sector. Despite the national interest rate being at a historical low of 3.75%, growth credit extended to the private sector averaged only 3% in 2021, compared to its pre-pandemic average of 7%.
Given the current levels of vaccination coverage, the expectation is that Namibia is not likely to reach herd immunity by the end of 2022. At the same time, economic growth during the first three quarters of 2021 averaged -0.5%, suggesting an extremely fragile economy. While sufficient vaccine coverage is not the panacea solution to the revival of economic growth, it creates the necessary conditions for the success of other long-standing reforms to be successful, such as creating a more conducive business environment and stabilising government finances.
Hope is on the horizon. The Omicron variant, although highly transmissible, has been epidemiologically found to be less serious than some of its predecessors. Gradual economic recovery is possible provided we double our efforts to encourage greater uptake of Covid-19 vaccines that do not only protect lives but will go a long way to safeguard livelihoods.