African economist Razia Khan has warned the slow rollout of Covid-19 vaccines will impact negatively on the continent’s economies that are already reeling from a year of lockdowns to slow down the spread of the disease.
Khan (RK), Standard Chartered Bank’s chief economist and head of research for Africa and the Middle East, told Alpha Media Holdings chairman Trevor Ncube (TN) on the platform In Conversation with Trevor that some of the biggest “economic risks Africa is still facing, is that it is going to take a long time to get the rollout of the vaccines”.
Below is an excerpt from the interview.
TN: Razia, in 2015 you were named as one of Africa’s 100 Most Influential People, which is why we are coming to you.
We celebrate you as a fellow African.
As a result of the expertise that you have, you have found yourself advising the United States Treasury Department, the New York Federal Reserve Bank and the African Development Bank.
That is a huge responsibility on your part, is it not?
RK: Well, lots of different institutions have an interest in African economies.
TN: Tell me, what is it like? You were born in Botswana. Talk to me about that. Where were you born in Botswana?
RK: My mother’s family had lived in South Africa, my father’s family had been in Botswana for a long time, so I was raised in Botswana before I came to the United Kingdom for university.
Fully Southern African in that sense.
TN: Where did you go to school, Razia?
RK: Most of my education up to A-Level was in Botswana itself, Maruapula School, may be very well-known to a Southern African audience.
After coming to the United Kingdom, I did both my undergraduate and post-graduate degrees at the London School Of Economics (LSE).
TN: What were those undergraduate and postgraduate degrees?
RK: Could I be really boring and say it?
TN: Yes, absolutely.
RK: At LSE it was economics with a focus on developmental studies.
TN: After that you went back to Botswana?
RK: That’s right.
After having started my career with Standard Chartered, initially in our Botswana operations.
Of course, Trevor, you would be very familiar with the history of the bank in the region, having been one of the main high street banks, a very well-known name across Southern Africa.
TN: In terms of looking at the growth continental picture, Razia, what risks do you see for the continent in the first instance?
What opportunities given where we are at the present moment? Talking in broad terms?
RK: Sure. The big issues across the world, not just Africa, as we all know was Covid last year.
Right now, we are in a situation where here in the United Kingdom, very dramatic progress is being made in terms of the speed with which vaccines are being rolled out.
There is a sense of confidence that even though we remain in a lockdown, which feels like it has gone on for some time, nonetheless if the pledge that every adult in the United Kingdom can be vaccinated by the end of July, that is a marker in the calendar.
That suggests that a reopening will be likely. Similarly the United States has been making rapid progress on that front.
The big uncertainty for many African economies is two-fold.
The first, as we know, there has been all of the discussion around Africa’s ability to procure vaccines.
Yes, we have started to see the rollout under the Covax scheme.
We have seen the arrival of some vaccines outside of the Covax scheme in South Africa.
If we look at the global numbers, as of yesterday, something like 0.04% of the vaccines have been administered in sub-Saharan Africa.
We know there are affordability issues.
For countries that are looking to do this perhaps outside of the Covax scheme, they are having to pay significant premiums to source the vaccines, though the Covax scheme, it seems to be happening very slowly. There is an impatience to say, can we not get this to go any faster?
The real risk that we see, front and centre of the economic risks Africa is still facing, is that if it is going to take a long time to get the rollout of the vaccines.
We know the Covid containment measures, the hard lockdowns, the curfews, come at an economic cost, we cannot keep that going indefinitely.
We are not looking at a situation where the vaccine supply is going to be available, let alone affordable for rapid rollout in the near term.
So the risk is we will have to find a way to live with Covid, to guard against the potential emergence of successive new waves of Covid, and it’s a risk for the global economy as well.
It makes little sense for developed economies to rest on the successes of their own vaccine roll-out if there is a substantial part of the globe where there has not been meaningful immunisation.
This really raises the risk that we could be seeing new variants, and then may be, the effectiveness of the current vaccines may be called into question.
We do not know the way these new variants are going to go.
So it would be in everyone’s interest to come up with a better solution.
More multi-nationalism, more of a concerted global effort to ensure that everyone has access to the vaccines.
TN: I did see a report, Razia, on that, from the United Nations Conference on Trade and Development (UNCTAD).
Actually saying there is potential that if vaccines are not made available to the developing world, the developed countries are going to be impacted negatively, due to trade relations and the trade connectivity and so forth. Do you have concerns around that?
RK: There are different ways of looking at this. One somewhat pragmatic view of this is that it will take a while to get the vaccines rolled out everywhere.
At least if you have a certain level of re-opening in developed markets.
That is where a lot of the economic activity is centred, so that will boost global demand and it is ultimately better for everyone’s economic prospects.
Yes, there is truth to that up to a point, but the real issue here is what Africa offers to the rest of the world.
We know that Africa has a younger demographic. We know that it has a faster population growth rate.
If we are looking where we would expect the centre of global consumption to be coming from in the future, increasingly it is in the younger developing markets with the right demographic.
That is where we are going to be seeing a lot more consumption in the future.
So if we are looking at a crisis in the present day, and if we are a little bit too comfortable about the fact that we are seeing a reversal of development gains, that we are seeing a real rise in poverty levels, that there are children who are unable to be educated where they would have been pre-Covid because schools have been shut for such a long time.
If no one is doing anything about that, it is a huge lost opportunity for the global economy, because the strength of consumption we could be seeing in the future, the strength of economic growth in what is very much an interconnected world.
What we are saying is we are letting that go right now with the inadequacy of the global policy response.
So this is something that needs to be looked at very carefully.
Of course, it is good news that there can be rapid rollout of the vaccines in any one centre, but the reality is we live in an interdependent world.
One, there is the health effect, if you haven’t seen sufficient roll-out of the vaccines everywhere; and two, it is a sub-optimal economic outcome.
TN: Are there lessons here for the continent, Razia? I am thinking in terms of, if you look at how to some extent the South African economy was able to deal with the manufacturing of PPE, and to some extent the Johnson & Johnson vaccine, there were some experiments/trials that took place down there.
Are there lessons around Africa investing in the manufacturing sector in the first instance?
Secondly, lessons around strengthening Africa’s health delivery system? What are your thoughts on that?
RK: Absolutely on both fronts. So what we have seen in the recent past, if we were to go back in time a little bit. We know that there has been a chequered history of economic growth through the 1970s and 1980s.
Things started to improve periodically in the 1990s for the region as a whole.
It was not, however, until 2001 thereabouts where we started to see a sustained rise in prospects for most of Africa.
The good news was, possibly that in most places, not all as there were exceptions of course.
Important exceptions, but in most of the major economies we started to see the building blocks for perhaps greater prosperity in the future.
The number one requirement is that you are able to sustain growth at a fairly high level for some period of time.
That means, investment has to stay high. So confidence needs to be there to be able to deliver that.
The problem with a lot of the growth that we did see was that it was not necessarily sufficiently broad-based, and in a lot of instances it was all about consumption.
So about that age-old issue of how do we boost manufacturing sectors, Africa will have the future population, it will have the scale, but will the manufacturing be entirely offshore?
Do other locations get such a big competitive advantage for that value addition that never comes to Africa? But we never see the benefit of that industrialisation.
Now that seems a very alarming way of looking at it, but what the recent crisis has shown us in a very clear way is that the ability to preserve what manufacturing capacity there is, the ability to build on that future manufacturing capacity, the ability to source all of the inputs that might be needed, including reliable and reasonably affordable power supply, this is going to be important.
We can do a whole hour just on the issues facing manufacturing.
However, to answer your question on that health care provision issue as well.
This is important. At the start of the crisis there was this realisation that given the relatively poor provision of public health care in many African countries, we were facing a really big threat. Now there were some positives as well.
The region’s recent experience with Ebola, the experience with being able to put new protocols in place very rapidly.
Populations that were generally very compliant with the kind of containment measures that were needed, these were probably strengths.
It is also the case that we can still be doing a lot more to boost health care provision across the continent.
This is a key requirement for development. We should never fall into the trap of measuring development just in terms of what GDP is doing, technical bounces, year- on-year does it look better than it did last year.
Development is about actual gains.
It is about the education that is happening, the quality of that education, the quality of health care provision and we should never ever lose sight of that.
The quality of what is changing matters every bit as much as the growth that we might see.
- “In Conversation with Trevor” is a weekly show broadcast on YouTube.com//InConversationWithTrevor. Please get your free YouTube subscription to this channel. The conversations are sponsored by Titan Law.