COVID-19 is a developing country pandemic
“Has global health been subverted?” This question was asked exactly a year ago in The Lancet. At the time, the pandemic had already spread across the globe, but mortality remained concentrated in richer economies. Richard Cash and Vikram Patel declared that “for the first time in the post-war history of epidemics, there is a reversal of which countries are most heavily affected by a disease pandemic.”
What a difference a year makes. We know now that this is actually a developing-country pandemic—and has been that for a long time. In this blog, we review the officially published data and contrast them with brand new estimates on excess mortality (kindly provided by the folks at the Economist). We will argue that global health has not been subverted. In fact, compared to rich countries, the developing world appears to be facing very similar—if not higher—mortality rates. Its demographic advantage of a younger population may have been entirely offset by higher infection prevalence and age-specific infection fatality.
Official data: Developing countries account for half of global mortality
The statement that this is a developing-country pandemic is not self-evident when we look at the official statistics (Figures 1 and 2). When it comes to per capita mortality, the official data suggest that the pandemic has been most intense in high-income countries (HICs). Cumulative mortality rates and—with a few exceptions—daily mortality rates have been higher for richer countries. Most people don’t look any further and decide that HICs have suffered more.
But it is necessary to also consider mortality shares. Mortality rates measure intensity, which highlights country performance, but they do a poor job in reflecting the contribution to global mortality. Given that the developing world is both younger and more populous than the HICs, we would expect its mortality rates to be lower and its mortality shares to be higher. Official data indeed show that the developing-country share in cumulative mortality is high: slightly above 50 percent (Figure 3).
This wasn’t always the case: The global mortality distribution has seen big swings since the onset of the pandemic. One upper-middle-income country (UMIC) dominated the global death toll initially: China. Soon after, outbreaks in HICs lifted their share in global mortality to almost 90 percent. A shift to UMICs followed, then quickly to lower-middle-income countries (LMICs). When winter came to the northern hemisphere, a new wave drove up the HIC share. More recently it has again started to recede. Throughout the period, the reported share of low-income countries (LICs) remained negligible.
The daily mortality distribution puts into sharper focus the most recent trends (Figure 4). The good news is that, in part thanks to vaccines, HIC mortality rates have plummeted. The bad news is that rates have spiked in LMICs and remain at high levels in UMICs. As a result, 2021 saw a complete shift in the daily mortality distribution: The LMIC share rose from 7 to 42 percent; the UMIC share from 33 to 42 percent; and the HIC share dropped from 59 percent to 15 percent—a trend that may become more pronounced in coming months.
Excess mortality estimates: The share of developing countries may be as high as 86 percent
The Economist has just published new estimates of excess deaths. Excess deaths measure the difference between observed and expected deaths throughout of the pandemic. Previously confined to mainly the richer countries, excess deaths are thanks to the new estimates available for the entire world. A gradient-boosting machine-learning algorithm helped fill the data gaps on the basis of 121 predictive indicators that are comprehensively available. With this method, global excess deaths are estimated at 7 million to 13 million, with 10 million as the midpoint.
Figure 5 shows the detailed results by World Bank income classification. Two patterns are striking:
Excess mortality rates for the developing world are much higher than what reported COVID-19 mortality data suggest: 2.5 times higher for UMICs, 12 times more for LMICs, and 35 times greater for LICs. For HICs they are practically the same—actually about 3 percent lower. To see this, compare the dashed and solid lines, which represent the population-weighted averages for each income group (see also Figure 6 for the time series).
Non-reported COVID-19 deaths and other excess deaths are much larger than reported COVID-19 deaths especially in poorer countries (compare the darker and lighter shades of each bar). The small gap for HICs may reflect the opposite effects of inadequate testing and “general equilibrium” impacts of the pandemic (such as the vanished flu season).
Perhaps the most striking result is the compression of mortality rates across income groups (Figure 6). Mortality rates in LMICs are the highest (157), then UMICs and HICs (both 118) and then LICs (98). But relative to the dispersion seen in the reported COVID-19 mortality rates (Figure 1), one could say they’re “about the same.” These estimates are subject to uncertainty, but the 95% confidence intervals are considerably above the reported mortality COVID-19 rates, particularly among UMICs and LMICs (which together represent 75 percent of the world’s population).
The midpoint estimates entail a completely different mortality distribution (Figure 7). If the midpoints hold true, the developing world may account for 86 percent of global mortality (as of May 10). This compares to a share of 55 percent using officially reported data. The biggest increases are in the share of LMICs and LICs.
While virtually all developing countries are contributing to the rise (see Figure 5), rising mortality rates in the developing world’s most populous countries will produce the largest absolute impact on global mortality. We can see this very vividly in Figure 8, which shows the cumulative death toll in millions of souls. The tragedy that continues to unfold in India has claimed a very large death toll of close to 3 million. While considerable uncertainty surrounds these estimates, alternative methods suggest they are in the ballpark.
Demographic advantage squandered
It is useful to do a thought experiment (Figure 9). Imagine all countries—rich and poor—faced the same epidemiological odds; that is, suppose that everyone has the same chance of getting infected and everyone faces the same age-specific fatality rates. Under these conditions, we would capture the pure effect of demography on the mortality distribution and obtain an estimate of the demographic advantage of the developing world.
In such a scenario, we expect the developing-world share in global mortality to be around 69 percent (Figure 9, middle bar in red). Applying common epidemiological parameters to the developing world boosts their share in global mortality because of the large absolute numbers of elderly. Though developing countries are younger, they are much more populous. As a result, the 60+ population of the developing world is 2.4 times larger than its counterpart in HICs. India alone, for example, counts 140 million people over 60; this is three times the number in Japan, which has the world’s oldest population after Monaco.
The generally younger age distributions of the developing world were believed to protect against a pandemic that discriminated against older people. The fact that the excess mortality shares (Figure 9, dark blue bar on the right) are significantly higher suggests that developing countries have likely squandered their demographic advantage as mortality is higher than demography alone would indicate. In other words, developing countries likely face worse epidemiological odds in the form of higher infection prevalence and/or more elevated age-specific infection fatality risk.
We can think of many structural reasons why that would be the case. Infection prevalence has likely been fueled by environmental factors such as urban density as well as poverty and informality, which complicate physical distancing. Over 1 billion people, mostly in developing countries, live in slums. Flattening the curve will therefore be more difficult in many developing countries, meaning that preexisting health capacity constraints will become binding more quickly.
Age-specific infection fatality rates are also likely more elevated than in HICs. Comorbidities are highly prevalent in the developing world. Of the 1.1 billion people with hypertension, two-thirds live in developing countries. Over the last decade, the number of cases and prevalence of diabetes has risen most quickly in the developing world. Moreover, limited access to quality health care in developing countries would mean that many ailments would be left untreated or undertreated, heightening vulnerability.
Official data point to a big shift in the mortality distribution to the developing world in recent months. Excess death estimates suggest that developing-country shares have been much higher than previously thought. Regardless of what the precise channels have been, one conclusion is clear: This is now—and has for a long time been—a developing-country pandemic.
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Partnerships for public purpose: The new PPPs for fighting the biggest crises of our time
We are currently facing some of the biggest crises of our time—climate change, learning loss, global health inequities, and more—and we need new approaches if we are to make meaningful progress toward tackling them. While there is no doubt that government plays an important role in helping to solve these critical issues and support social service programs to combat them, it has long been recognized that the private, or nonstate, sector has the potential to bring a multitude of benefits in either the delivery or financing of those services through public-private partnerships (PPPs). We see great potential for a new type of PPP—partnerships for public purpose* (new PPPs)—which emphasizes not whether the partner is from the public or private sector, but whether these collaborations and their impact have a publicly oriented purpose.
Reimagining public-private partnerships
PPPs have existed since at least the Roman Empire—in the form of concessions —for the construction of public baths and roads and the management of public markets. In fact, when most people think of PPPs, this Roman model is often what they picture—an antiquated model of government infrastructure outsourcing that pits public interest against private financial interest, rather than fostering collaboration, as the term partnership would imply. Furthermore, in this old model, the “private” sector implies for-profit industries, and thus nonprofit, third-sector, social-enterprise, and other stakeholders are often excluded. PPPs must evolve beyond this traditional definition in order to meet this moment.
Partnerships for public purpose, on the other hand, put the emphasis on multilateral relationships that support sustainable, long-term, and systemic impact. Instead of being constrained by private finance contracts or by cost-reduction strategies, these new PPPs encourage true partnerships with a diversity of stakeholders. By harnessing the technical expertise, approaches, and networks possessed by governments, private-sector organizations, nongovernmental actors, and donor agencies, these new PPPs can provide innovative mechanisms and promote collaboration to address challenges that traditional government resources and competing priorities struggle to negotiate. In doing so, they can increase capacity, improve quality, enhance equity, and target poor or marginalized populations for the delivery or financing of services.
An increasing number of these new PPPs are being put into practice and delivering results for citizens around the world. Over the past decade, outcome-based financing mechanisms such as social, development, and environmental impact bonds (SIBs, DIBs, and EIBs), as well as outcomes funds, have arisen as key forms of these new PPPs. These mechanisms bring together multiple stakeholders, which could include governments, NGOs, social enterprises, donors, and investors, to collaborate and deliver a set of outcomes—paying only when results are achieved. In an impact bond, investors (often impact investors) provide risk funding for social services programs, and this investment is repaid—oftentimes with a return—based on the program’s achievement of predetermined social and/or environmental outcomes. Outcomes funds pool funding to pay for outcomes in a particular issue or geographic area, potentially for distribution across many impact bonds. For more on how these mechanisms work, see “Impact bonds in developing countries: Early learnings from the field.”
What makes impact bonds and outcomes funds partnerships for public purpose?
Impact bonds and outcomes funds foster deep partnerships through various mechanisms inherent to the model. First of all, they bring together a multitude of actors that often don’t sit together at the table and—since they require the expertise and contributions of all stakeholders involved—each is dependent on the others for the initiative to function. Furthermore, while these mechanisms often face criticism for being costly and labor intensive to design, the time and resources dedicated upfront and throughout impact bond and outcome funds projects creates both collective accountability and ownership of the results. Finally, the model has the potential to create true partnerships with the beneficiaries themselves, who best understand their own needs, by including them in the design of the initiatives.
These models are also designed with public purpose at the fore, since the focus is on successful achievement of outcomes, such as improved learning levels or gainful and sustained employment. Moreover, since impact bonds and outcomes funds allow for the tailoring of services to disadvantaged populations, they can provide more comprehensive support across multiple sectors or issue areas, which can benefit all of society. In addition, these models ensure that public spending is effective: Tax dollars are not wasted on social services that don’t work, and they can reduce costly remedial services and increase benefits further down the road.
Impact bonds, outcomes funds, and other partnerships for public purpose (new PPPs) have the potential to support COVID-19 recovery while strengthening social service delivery and, in essence, changing its DNA.
Impact bonds have already demonstrated their potential to help address a range of social issues in high-, middle-, and low-income countries, with over 200 implemented across 35 countries, including 19 in developing countries. Some examples of impact bonds achieving public good include a program to improve learning outcomes of over 200,000 disadvantaged children across four states in India, an initiative aimed at improving livelihoods by supporting first-time entrepreneurs in Kenya and Uganda, and a program in Israel focused on the prevention of Type 2 diabetes. Another impact bond, the Impact Bond Innovation Fund, brought together a multitude of actors including a local government agency, several philanthropic entities, a university, and both a local and an international NGO to support an early childhood development program for marginalized children in the Western Cape in South Africa.
Several outcomes funds have also been established, and additional ones are being designed. One example is the Education Outcomes Fund (EOF), an effort to significantly improve learning and employment outcomes by tying funding to measurable results. EOF partners with governments, donors, implementing partners, and investors to achieve concrete targets for learning, skill development, and employment. With initial projects in Ghana and Sierra Leone, this approach is being scaled up with the aim of transforming the lives of 10 million children and youth around the world. EOF has recently joined the United Nations as a hosted partnership—showing the growing institutionalization of this model.
Conclusion: Where do we go from here?
While the past decade has seen significant growth in new ways for private, public, and third-sector actors to work together in partnership, thus far many of these initiatives have been on a small scale. What will it take to expand this model? Seeding and institutionalizing an outcomes-focused mindset at all levels of government, among international agencies, and within nonprofit service providers is the first step. This will require risk-taking, the willingness to rethink traditional models, and the agility to go big. It will also necessitate capacity building of all stakeholders to engage in this new way of working. Models like EOF and other outcomes funds are laying the path for large-scale partnerships that place beneficiaries at the forefront. Now more than ever, as the world is building back after the COVID-19 crisis, we will need strong partnerships that support public purpose in a cost-effective and impactful way. Impact bonds, outcomes funds, and other partnerships for public purpose (new PPPs) have the potential to support this recovery while strengthening social service delivery and, in essence, changing its DNA.
*Note: The authors borrowed the term “partnerships for public purpose” from K. Srinath Reddy in “The Convergence of Infectious Diseases and Noncommunicable Diseases: Proceedings of a Workshop (2019).”
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Figure of the Week: Closing the gender gap to reduce food insecurity in Africa
In April of this year, the Oxford Business group released its “Agriculture in Africa 2021: Focus Report”. This report outlines the region’s export potential and food security challenges in the face of the detrimental impacts of the COVID-19 pandemic. It also explores how the creation of the African Continental Free Trade Area (AfCFTA) and the modernization of agricultural processes are generating growth opportunities across the agricultural ecosystem.
The report shows how the COVID-19 pandemic weakened already precarious food security in Africa through reductions in income and disruptions in the supply chain. Prior to the pandemic, food security was already a major concern in the region, with the most affected being fragile and conflict-afflicted states. Of the 86 countries worldwide that are categorized as low-income and food-deficient, 43 of them are located in Africa. Indeed, according to the Africa Center for Strategic Studies, over 100 million Africans faced crisis, emergency, or catastrophic levels of food insecurity in 2020.
At the same time, due to its abundance of arable land, Africa has the potential to meet its needs as well as those of the rest of the world when it comes to food supply. More specifically, the authors of the report suggest that closing the gender gap and empowering farmers traditionally restricted in their access to finance and technologies can create major gains when addressing food insecurity.
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Figure 1 shows the outputs and inputs on farm plots managed exclusively by men and women in Africa. Notably, while all of those who work in agriculture face the same issues—financing, climate change, etc.—women and youth are disproportionately affected. According to the report, output value for men (in the case study countries) is higher than that of women. More specifically, argue the authors, the inability of women in rural communities to own their own bank accounts, negotiate with suppliers, and use financial services keeps them from expanding and operating at their full potential as farmers. Furthermore, write the authors, if women—who make up 43 percent of the agricultural labor force in developing countries—had the same access to finance as men, agricultural outputs could increase up to 4 percent in 34 countries, potentially reducing the risks of food insecurity and malnourished people by 12 to 17 percent globally. One notable fact included in the figure is the enormity of the gap between men and women in Uganda, in terms if access to fertilizer—with men using nearly 10 times more fertilizer per acre on their plots than do women.
Figure 1. Outputs and inputs on farm plots managed by men or by women
Source: “Agriculture in Africa 2021,” Oxford Business Group, 2021.
In the end, the authors recommend that governments and development organizations tailor their initiatives toward empowering the demographics routinely disproportionately affected by way of increased access to advanced digital technologies, infrastructure improvements, mechanization programs, and financing and input subsidies.
For more information on food insecurity see, “The future of data: Unmasking community-level differences to better address food insecurity,” “Protecting food security in Africa during COVID-19,” and “Policy priorities for achieving food and nutrition security by 2030.”
20210525 World Trade Online Joshua Meltzer
[On provisions related to cybersecurity in USMCA and a digital trade agreement between the U.S. and Japan] It’s about information sharing and so forth, but I think it’s clearly the beginning of what I would expect to be a more elaborated set of ways that trade partners can cooperate on cyber issues, because I think this will be an increasingly important part of trade policy going forward.
Agricultural insurance: The antidote to many economic illnesses
In recent years, the world has encountered a range of compounding shocks: droughts, floods, wildfires, cyclones, and most recently, a worldwide pandemic that has taken over 3.3 million lives—some estimates even indicate up to 13 million deaths. Although the pandemic will (eventually) pass, the next global challenge is already upon us. Climatic shocks are expected to increase in frequency and severity.
Gracelin Baskaran
Consultant, Equitable Growth, Finance and Institutions Group – World Bank
Senior Research Fellow, Development Policy Research Unit – University of Cape Town
Barry Maher
Actuary and Senior Financial Sector Specialist – World Bank
Agriculture—still the most important sector in many poor countries—is directly affected by climatic shocks. Besides threatening global food security and stability, these shocks can cripple livelihoods, disrupt value chains, and even undermine macroeconomic stability. Climatic shocks have caused significant budget volatility in recent years and deepened corruption challenges. Agriculture insurance can be an antidote to these risks: It de-risks lending to the farm sector enabling repayment of loans, reduces budget volatility of agriculture-related fiscal expenditures by transferring climatic risk to the private sector, increases fiscal space during shock years, and stimulates growth of the agriculture sector, which can unlock job creation potential. It can even reduce the scope for fiscal leakages and corruption.
The case for public policy
But agriculture insurance suffers from market failures and information asymmetries that require government intervention to achieve scale and sustainability (see “Government Support to Agricultural Insurance” by Olivier Mahul and Charles Stutley). Information asymmetries arise as farmers understand their risk profile better than insurance companies, introducing scope for anti-selection and moral hazard. Insurance companies need high quality yield data to vet and underwrite products. Being both non-rivalrous and excludable, yield data are a public good, necessitating government intervention to avoid monopolization. Besides, while insurance companies are in the business of managing risk, they often have limited appetite for agricultural risk given its exposure to catastrophic losses from single events. This leads to rationing of exposure or even refusal to underwrite agricultural risks by insurance companies. Finally, farmers often have low levels of financial awareness requiring public support for financial education programs.
Figure 1. A straightforward rationale for government intervention
Source: Authors
Success stories
There are many examples where governments, in partnership with the private sector, have used agriculture insurance to manage the financial impacts of climatic shocks and to support growth of the agriculture sector. Here are three—with many more in the book referenced above. First India, where the government wanted to raise productivity in small and medium farms. Since these farmers were unable to access credit due to poor collateral, this stunted investment. In Gujarat state, the government launched a public-private agriculture insurance program called the Comprehensive Crop Insurance Scheme of India where subsidized agriculture insurance served as collateral for credit. This increased the flow of credit to farmers, both in coverage and size, from 19 percent to 27 percent of the credit portfolio. The scheme was the inspiration for a national program, though farmers in India continue to face major obstacles in insuring their crops.
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In Kenya, the provision of relief to farmers was a constant fiscal drain. The catastrophic drought in 2008-2011 was estimated to have had an overall impact of $12 billion—about 11 percent of 2011 GDP. As part of the response, the government adopted a National Disaster Risk Financing Strategy, under which an agriculture insurance program implemented in partnership with the private sector targets vulnerable farmers (this World Bank project document provides details). The insurance is bundled with high-quality inputs and sold to farmers as a package. In return for the premium, if the rains fail, the insurance compensates them for losses. If rainfall is good, they get bumper crops. Payouts are delivered via mobile money that increases the speed and transparency of relief support and promotes financial inclusion by providing access to savings. Over half a million farmers are now protected under the program, which strengthens the financial resilience of the farmers and agriculture-related value chains to shocks, while also protecting the government from budget volatility by transferring some of the risk to private markets.
In Kenya and India alike, governments have provided support for the data collection to design the insurance products, as well as premium co-financing to lower the cost to farmers and incentivize insurance companies to extend coverage.
Finally, agriculture insurance can reduce corruption and fiscal leakages. In February 2021, President Ramaphosa of South Africa identified corruption as one of the most serious impediments to South Africa’s development. In the current model, after a “State of Disaster” is declared, payments are made from National Treasury to provinces and municipalities and then to farmers, opening several channels of fiscal leakage. With agriculture insurance, insurance companies pay claims directly to the beneficiaries in the event of shocks. Payouts are made into beneficiary bank accounts or their mobile money accounts, reducing both delay and diversion.
A fiscal instrument for the times
With a jaw-dropping $16 trillion of fiscal support provided to countries worldwide and vaccine rollout working its way around the world, public balance sheets are too weak to support the recovery. Budget volatilities resulting from climatic shocks could very well lead to many countries being tipped into debt distress or worse. Agriculture insurance offers a way to reduce volatility, strengthen resilience, and support productivity growth in the agriculture sector—a sector that provides livelihoods to billions, food security to everyone, and stability to entire economies. With compounding shocks, utilizing innovative insurance solutions is more important than ever.