GCRF_NF278 Building evidence on households, firms and value chains to support economic policy decisions under COVID-19

Lead Research Organisation: London School of Economics and Political Science
Department Name: International Growth Centre

Abstract

IGC has worked with policymakers in the nine named countries to identify key research questions to understand how COVID-19 is impacting their economy, how the economic recovery can be accelerated, which policy interventions should be implemented and how assistance should be provided to those most in need.
Our Co-Investigators, based in the named DAC-list countries, are uniquely positioned to implement a co-generation approach with policymaker partners to design research projects that will inform key policy decisions in the next 18 months and so will maximise impact from the research.
Our Principal Investigator, IGC's Research Director, will leverage IGC's network of world class researchers to work with Co-Investigators to design high quality and robust research. This proposal will enable us to fund around 30 individual studies, all addressing first order priorities for policymaker partners, and building on the 34 COVID studies we have already launched.
Research will combine existing administrative data, which Co-Investigators have good access to and familiarity with, and new data through phone surveys. Data priorities include monitoring value chains, firms and households' economic activity, and measuring the effectiveness of policy interventions on economic agents. We will feed data and research findings back to our existing policymaker contacts, including monitoring dashboards, infographics and appropriate policy options, to facilitate real-time, evidence-based decision making in the participating countries.
The two main research activities to be carried out under this project are:
- Monitoring and tracking economic activity, focusing on the post-lockdown economic recovery, through descriptive analysis of administrative data and of new survey data generated using carefully designed survey instruments implemented by phone. The analysis carried out will help identify which firms and households are most affected by the economic crisis, the main constraints they are facing and the support they need from
governments. Results will be made directly available to policymakers through a series of dashboards and high frequency policy reports.
- Testing the effectiveness of policy interventions by building on sample frames from previous randomized control trials to measure the impact of current interventions and, where appropriate and feasible, of new interventions co-generated with policy makers. Comparative analysis undertaken by local and UK-based researchers will use crosscountry and cross-sector variation in policy interventions to assess the effectiveness of these interventions.
 
Description "Economic impacts of Coronavirus-19 on workers in Bangladesh's Garment Sector" - COVID-19 did not led to widespread, prolonged factory closures in Bangladesh. While factories did not close, they did face large, negative shocks: 46% of garment factories in Bangladesh report that "a lot" to "most" of their orders as of March 2020 were cancelled. Similar earnings dynamics for women and for men over the pandemic. While women and men's incomes exhibit similar dynamics, on average, women earn less than men throughout the period.
We document that while 13% of garment workers experienced layoffs, on the whole, garment work appears to be superior to alternatives, at least during a pandemic. Garment workers' earnings declined approximately 39% at the height of the pandemic but have since recovered; in contrast, those who left the sector since January 2020 appear to experience more permanent declines in income.
Finally, we document high reported adoption of a small number of core COVID-19 prevention practices among employers, but wide variation in adoption of other prevention measures known to be important for reducing spread. Employers' adoption of COVID-19 prevention practices is negatively correlated with workers' experience of COVID-19, even controlling for workers' personal characteristics. On the whole, employers significantly increase adoption of these policies between January and April 2021. In January 2020, the mean (median) adoption rate was 72% (67%) of the three policies, and in April it is 89% (100%). Workers report being close enough to touch an average (median) of 70 (20) workers in January, which declines to 26 (5) in April.
Survey respondents report that their households are facing other challenges to their well-being due to COVID-19. In particular among wave 1 respondents in November 2020, substantial shares report reducing food purchases due to high prices (44%) or to income drops (22.5%). Among respondents in later waves, the proportions experiencing these difficulties are lower, but still meaningfully high.
22% of wave 1 respondents and 15% of wave 2 respondents report borrowing money, while 17% and 12%, respectively, report spending savings in March 2021. The need for money falls back in April and increases again in May. Evidently, many households continue to struggle to get by during the COVID-19 pandemic.
""ARE ETHIOPIAN FIRMS ON THE ROAD TO RECOVERY FROM THE PANDEMIC? EVIDENCE FROM TEN ROUNDS OF HIGH-FREQUENCY PHONE SURVEYS IN ADDIS ABABA" - We find that more than 95 percent of firms in Addis Ababa were affected by the COVID-19 pandemic. When the pandemic first struck in early 2020, about 42 percent of firms were closed and not a single firm reported to be fully operational. Lower demand for products/services, lower supply of raw materials and intermediate goods, COVID-19 regulations, and closure of marketplaces/shops were key factors that contributed to firm closure and scaling down of operations. The good news is that many firms have resumed operation and there is a gradual improvement in the share of firms that become fully operational (72% in February 2022). A similar pattern is also reflected in the evolution of sales turnover where a perceptible decline in sales revenue in the early months of the pandemic is largely reversed one and a half years after the onset of the pandemic. Signs of strong recovery are also observed in reported profit, which in June/July 2020 stood at 17 percent of the corresponding values in the preceding year and largely converged back to their pre-COVID 19 levels in February 2022.
Trends in workers' wages, where the earlier day of the pandemic is associated with significant negative shock, are also largely reversed with wages bouncing back to their pre-COVID 19 levels irrespective of workers' skill levels. Throughout the survey periods, firm downsizing through worker layoffs and expansion through hirings have been modest. In recent rounds where businesses appear to be in full recovery swing, however, an increasing share of firms expects to lay off workers and hiring expectations remain subdued. Considering that the current global and local economic and political conditions may not be favorable for business expansion, it is not surprising that businesses might choose to maintain the status quo. Taken together with the initial dip in employment, however, this might portend a jobless recovery pattern or even tougher times ahead that may introduces added fragility to the early recovery progress.
A larger share of firms started full operations, particularly after August/September 2020 (round six of the survey) with a continuous increase in every survey round. In January/February 2022, 72 percent of firms were fully operational. While the significant improvement in firms' level of operations is a piece of encouraging news, the presence of a significant number of firms that remain either closed or operate below their capacity is worrying.
Yet, firms' expectations of their future do not seem bright, likely related to the economic downturn in recent months related to foreign currency shortages, global supply shock, and the conflict in the Northern part of Ethiopia. An increasing share of firms expects to lay off workers, a share that has vastly increased since May/June 2021
""The Impact of the Covid-19 Pandemic on Household Well-being and the Role of Mobile Money: Panel Evidence from Ghana" - Convincing evidence on the importance of active mobile money use in attenuating the adverse effects of the Covid-19 shock on household well-being by facilitating access to digital credit and receipt of remittances. These insurance effects are more pronounced in rural areas compared to urban areas. In terms of the gendered impacts, female users are able to mitigate the adverse well-being effects of the shock better than their male counterparts.
the proportion of respondents who use m-money frequently (defined as individuals who had performed any financial activity with their m-money service the day before the interview) increased from 29% in 2019 to 44.5% in 2021. This suggests that the pandemic is fuelling greater use of m-money.
Overwhelming majority of respondents (~64%) experienced a significant reduction in what they earn. ~87% are either no longer able to work at all, seen a significant reduction in what they earn or experienced a minor reduction in their earnings. Clearly, there's been a significant income shock due to the Covid-19 pandemic.
Only a handful of respondents are using their m-money accounts to access digital loans as a shock absorbing mechanism. It is however worth noting that about 5% of respondents now have a digital loan, compared to less than 2%
A greater proportion of the sampled individuals (compared to pre-Covid) are now using their m-money accounts to conduct various transactions: buy airtime top ups, pay for goods and services, and receive wages.
Another notable observation is that females tend to use m-money more frequently than their male counterparts. With females continuously being discriminated against informal financial markets, it is not surprising to see females engaging more actively with alternative financial mechanisms such as m-money. The results show that females' active use of m-money yields a stronger well-being effect for the household in the face of an adverse shock compared to men's - more specifically, the shock-absorbing effect is almost twice that of men's. This finding underlines the importance of promoting digital financial inclusion of women in the post-Covid-19 "building back better" agenda.
We find that both the remittance and loan functions of m-money play a significant role in mitigating the adverse well-being effects of Covid-19: those who received m-money remittances during the pandemic for support attenuated the adverse effect of the unanticipated shock on their household's wellbeing by 7.5% percentage points; while those who have access to a digital loan mitigated the impact by 10%.
Active m-money users are able to significantly mitigate adverse food consumption shocks, income shocks, health shocks, and adverse shocks to children's education.
the insurance effects against shock to well-being is more pronounced in rural households compared to urban households,
"Monitoring the Impact of COVID 19 in Myanmar: Rice millers - January 2021 Survey Round." - Disruptions to selling rice and buying paddy driven by transportation restrictions have typically been the largest challenges throughout the survey rounds, and the January 2021 round is no exception. Selling and buying disruptions were reported by 34 and 30 percent of millers, respectively.
More troublingly, 25% of millers reported challenges receiving repayment from credit previously lent out, 8% reported difficulty repaying their own loans, and 12% reported challenges obtaining new credit. Each of these credit indicators was at their worst level since the pandemic's first wave.
In line with the credit disruptions in Figure 1, a higher share of millers sought new loans in January - 30%, the highest level since August 2020 when COVID-19 relief loans were made available. 57% of loan applicants were successful, and the most common sources were MADB, private banks, and COVID-19 relief loans issued by UMFCCI.
Purchases happen mainly within the mill's state/region (98% in 2019) and predominantly in the mill's township (74% in 2019). Thus, most paddy is purchased locally from the rural areas surrounding mills and a sizeable share (26% in 2019) is purchased directly to the mill. In contrast, rice sales typically happen in a different state/region (61% in 2019).
We also asked millers about transportation costs to their main purchase and sales locations in January 2021 compared to the same time in 2020. Overall, reported transportation costs were 9% higher for paddy and 6% higher for rice.
Overall, 39% of millers reported lower throughput in the monsoon harvest season in 2020 than in 2019. Forty-four percent perceived no change and just 17% reported an increase. Lower paddy production was the most common reason cited for lower throughput among those mills reporting a year-on-year decline (55%), and it was a much more common response for mills in Ayeyarwady and Bago (59%) than those in Yangon (29%).
"Vulnerabilities and solutions for Mozambican enterprises in the face of the COVID-19 crisis." - Overall, results are in line with previous findings. Our survey registered critical revenue losses during the pandemic. The mean value of revenues dropped around 60% from 2019 to 2020, and the recover in 2021 is still very far from the levels observed during the pre-pandemic period. Importantly, the losses in revenues were not accompanied by lower expenditures, that show a stable pattern throughout the whole period under analysis.
Only 6.9% of firms interviewed were able to access any kind of benefit from the Government. More than 80% companies declared that they were no aware of such support instruments, which highlights the importance of information programs that facilitate access of targeted populations to public policies.
Reduction in business working hours and increase usage of digital platforms were the most popular solutions mentioned by managers to counterbalance the negative effects of the economic crisis. More than 50% of managers reported to have had reduced working hours voluntarily and 19.7% closed doors temporarily. Temporary layoffs of any kind were not a popular solution, with a relatively low number of companies adopting paid or unpaid layoff strategies.
Another important feature of our survey is that female-led businesses were less likely to remain open since the last Enterprise Census (CEMPRE) of Mozambique, that took place between 2015 and 2016, compared to men led businesses. Therefore, our data supports recent findings of a performance gap between male and female micro and small entrepreneurs
Interestingly, the number of employees kept decreasing in 2021, even when revenues started to recover.
"Impact of COVID on Fresh Produce Supply Chains: Evidence from Pakistan." - farmers' share of the auction price on average reduced by a significant 12 percentage points during COVID lockdowns while the middlemen were able to take advantage of the COVID related lockdowns by increasing their price share by on average 6 percentage points. The results show that the middlemen were able to negotiate better terms from both the farmers (by paying them less share of the auction price) and the retailers (by charging more of the share of the retail price) during the time of COVID related restrictions.
This points to the fact that farmers who have lesser market linkages have a higher vulnerability than those who have access to the market via licensed agents.
Data contribution: The data used in this study has been gathered from a variety of sources. One of the contributions of this paper is the unlocking of these data sources that can facilitate further research on related topics for Pakistan. These data sources are not otherwise known or easily available to researchers and their acquisition was possible only after obtaining special permissions and employing personal connections in the bureaucracy. (see paper for detailed description).
"Increasing COVID Vaccination Uptake in Lahore, Pakistan. " - results ongoing
"Sierra Leone Vaccination Study Pilot Report." - Nearly all respondents in this study believe that the COVID-19 vaccine is safe and effective (over 80 percent). These beliefs are likely encouraged by positive news portrayal of COVID-19 vaccines. Respondents in the study were most likely to receive information about COVID-19 from news media sources, and the majority reported that the news portrayal of COVID-19 vaccines is "very positive" or "somewhat positive".
Only around 10 percent of respondents had received their first dose of the COVID-19 vaccine by the end of the three rounds of data collection.
The surveys show that the majority of respondents agree or strongly agree that they trust the health care providers at the local CHC on matters relating to COVID-19 vaccinations. This highlights the importance of community health workers in disseminating information about vaccines
This 48-72 hour intervention produces 27 percentage point increase in adult vaccination rates
The RCT provides a proof-of-concept that we can get large numbers vaccinated - even in the most remote, rural areas - quickly and cost-effectively (31 USD per vaccine).
There are several factors that dilute government efforts to boost vaccination. Successful vaccination campaigns rely on active engagement of community health workers. A critical shortage of skilled health personnel compounded by the majority of health workers working in urban areas (for example, 40 percent of all midwives serve in Freetown) undermine the efficacy of vaccination programs. As of November 2021, primary data collected byt our team shoe that in rural Sierra Leone the average time to travel to the nearest vaccination clinic by motorbike was 85 minutes, at a cost of USD 6.5 one way11. In a country where 43 percent of the population live on less than $1.90 per day, the current distance and cost of receiving the COVID-19 vaccine make it inaccessible to many.
"Informal clustering, firm growth, and the impact of the COVID-19 shock." - The primary reason why owners locate their business in the CBD is to have access to customers. Firms in the CBD are more profitable than in the periphery, but remain smaller in terms of number of employees, assets and size of the premises. While firms in the periphery serve a local customer base, around 50% of customers in the CBD are from outside Kampala. The introduction of measures that restricted inter-travel district in June 2021 led to a sharp drop in the revenues of firms in the CBD, while it did not affect businesses in the periphery
"RECOVERY FROM THE COVID-19 SHOCK AND THE INFORMAL LABOR MARKET IN URBAN UGANDA." - The second lockdown was a temporary shock to the operational status of firms. Firms continue to cite challenges in access to demand and suppliers due to the economic impact of the shock. The predominant challenge cited by over 65% of all firm owners is a loss in demand due to economic reasons, e.g., regular customers can no longer afford their products or services or have cancelled orders. 57%-60% of SMEs also reported facing supply chain concerns, i.e., a reduction in the availability or increase in the price of key inputs
"Sourcing Strategies & Supply-Chain Resilience: Garments during the Pandemic." - The global garments trade collapsed at the onset of the COVID-19 pandemic, i.e., February 2020. On average, the total number of transactions fell by 15% on March 2020, and 62% on April 2020 with respect to January 2020. On a month-to-month basis, transaction fell by 1% on March 2020 and 53% on April 2020.
Exploitation Route Learnings will be relevant for designing rapid escalation policies to combat future health and climate related shocks in developing countries.
Sectors Agriculture, Food and Drink,Communities and Social Services/Policy,Financial Services, and Management Consultancy,Other
 
Description Below is a summary of policy impact achieved through individual projects under this grant - 1. "Are Ethiopian firms on the road to recovery from the pandemic? Evidence from ten rounds of high frequency phone surveys in Addis Ababa" - Results from the earlier waves were shared through our collaboration with the former Job Creation Commission (JCC) (now Ministry of Labor and Skills) to support the Government of Ethiopia jobs recovery strategy by providing information on which sub-sectors to prioritize for wage-subsidies. 2. "Monitoring the Impact of COVID 19 in Myanmar: Rice millers - January 2021 Survey Round." - Mill survey results have been used by USAID to formulate plans for humanitarian responses to COVID and coup. For example, recommendations to lift restrictions on the banking sector and cash withdrawal amounts which have been a large constraint in milling sector. 3. "Vulnerabilities and solutions for Mozambican enterprises in the face of the COVID-19 crisis." - The research team had 25 official meetings between June 2021 and January 2022. We contacted different stakeholders in order to receive information about the context of our research, the databases available and potential contributions. The main institutions that were contacted by the research team are: Ministry of Economics and Finance of Mozambique, Ministry of Industry and Commerce of Mozambique, Institute for the Promotion of Small and Medium Enterprises (IPEME), National Institute of Statistics (INE) and Confederation of Economic Associations of Mozambique (CTA). This project received important influence of the MEF and IPEME in its design, which resulted in an extension of the project during the following months. All results are considered to be highly relevant for the decision making of the mentioned stakeholders. Our findings provide important insights about how those organizations can promote growth of MSEs and create a better business environment for smaller entrepreneurs. Therefore, we believe our results will be taken into accoun in the design of future policies implemented by those institutions. 4. "Impact of COVID on Fresh Produce Supply Chains: Evidence from Pakistan" - The results from this will be shared with the Department of Agriculture, Government of Punjab, and the local district administrations through the Board of Revenue. Further, the policy partners have shown keen interest in contributing to the policy recommendations (through the Policy Brief) and are in the process of providing feedback and input. Over the course of the project the agriculture department of Punjab was consulted at different points in time to gather input regarding suggestions on how best to carry out the surveys and data collection. The department and PBS was also instrumental in helping us secure data that was used to measure the effect of covid in this project. Further, the representatives of the Department of Agriculture have shown keen interest in contributing to the policy recommendations (through the Policy Brief) and are in the process of providing feedback and input. 5. "Increasing COVID Vaccination Uptake in Lahore, Pakistan." - The data collected in this intervention was shared with policymakers at the Commissioner Lahore's Office as well as Health Department in weekly stock take meetings to iterate on the COVID vaccine policy and field plans in real-time. We were also working with the national COVID response teams so that our results and the pilot in Lahore might inform nationwide policy and ultimately nationwide scale-up. 6. "Sierra Leone Vaccination Study Pilot Report." - The United Nations International Children's Fund (UNICEF) is providing technical support to the Ministry of Health and Sanitation (MoHS) of Sierra Leone for the implementation of the COVID-19 vaccination campaigns. The Programme Manager of the Expanded Programme on Immunization (EPI) is one of the co-Investigators on this project. As a result, the team has been having frequent and extensive exchanges about how the results can inform the vaccination campaing. In addition, the team has been participating in all Technical Working Groups for the COID-19 vaccination campaing. Thisresulted in EPI, Ministry of Health and Sanitationa and partners to adopt the recommendation that the reach of the vaccination programme should be expanded through mobile vaccination teams and making the vaccine available in peripheral health units. 7. "Informal clustering, firm growth, and the impact of the COVID-19 shock." - Preliminary findings from this project were presented and discussed with policy makers during three dissemination events organized in collaboration with IGC Uganda: 2022 Economic Growth Forum, an online seminar with the top management of Uganda Ministry of Trade and Cooperatives, and a separate online seminar with senior officials from KCCA. At the Economic Growth Forum, the focus of the presentation was on the consequences on COVID-19 related policies on firms across Kampala. The two online seminars discussed more boradly the links between firm location and economic performance, and their implication for urban policies.
First Year Of Impact 2021
Sector Agriculture, Food and Drink,Healthcare,Government, Democracy and Justice
Impact Types Policy & public services