The Impact of COVID-19 Pandemic on Social Welfare and the Health System Capacity of East African Economies: A Comparative Analysis

Amutabi, Cyprian (2021): The Impact of COVID-19 Pandemic on Social Welfare and the Health System Capacity of East African Economies: A Comparative Analysis.

Abstract

This study analyzed the degree of impact of COVID-19 on social welfare and health system capacity across some selected EAC countries using monthly series data for the period March 2020-May 2021. The potential Intensive Care Unit (ICU) bed and ventilator surge capacity were estimated based on the confirmed COVID-19 cases & the actual number of ICU beds and oxygen ventilators while the degree of variation of the pandemic’s impact on social welfare was analyzed using the Pooled Mean Group (PMG) estimator. The findings revealed the existence of significant gaps across hospitals in the EAC region in accommodating any potential surge in the caseload emanating from COVID-19. This was evidenced by a continuously rising number of confirmed COVID-19 cases against a backdrop of a limited number of ICU beds and ventilators needed to provide critical care. The PMG results revealed that COVID-19 significantly decreased the Consumer Price Index (CPI) in the long run. In the short run, the impact was negative and significant for Kenya but insignificant for Rwanda, South Sudan, and Uganda. Conversely, COVID-19 significantly increased oil prices in the long run. In the short run, the impact was positive and significant for South Sudan but negative and insignificant for Uganda. This study, thus, recommended adequate investment in the health sector targeted at a substantial increase in the number of ICU beds and ventilators. Further, governments within the region need to employ a coordinated approach in addressing welfare effects stemming from increased oil prices. There is a need to promote regional market integration & cooperation within the EAC region regarding oil. A robust & vibrant EAC oil market will enable countries within the region to harness optimal benefits from their oil reserves as well as withstand any global price shock dynamics that emanate from a pandemic of this nature.

• Item Type: MPRA Paper
• Language: English
• Keywords: COVID-19, Health system capacity, Social welfare, PMG estimator, EAC region
• Subjects: H - Public Economics > H1 - Structure and Scope of Government > H12 - Crisis Management; I - Health, Education, and Welfare > I1 - Health > I14 - Health and Inequality; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I31 - General Welfare, Well-Being

References

AGRILINKS. 2020. Coronavirus and the Implications for Food Systems and Policy. AGRILINKS. Retrieved from: https://www.ifpri.org/news-release/coronavirus-and-implications-food-systems-and-policy-agrilinks. [Accessed on March 12, 2020].

Amutabi, C., 2021. Drivers of public health expenditure in Kenya: Do structural breaks matter? European Scientific Journal, ESJ, 17 (23), pp. 143-162.

Ataguba, J. E., 2020. COVID 19 Pandemic, a War to be Won: Understanding its Economic Implications for Africa. Applied Health Economics and Health Policy, 18, pp. 325-328. https://doi.org/10.1007/s40258-020-00580-x.

Baldwin, R. and Tomiura, E., 2020. Thinking ahead about the trade impact of COVID-19. In Baldwin, R. and di Mauro, B. W., Economics in the Time of COVID-19. London, UK: Centre for Economic Policy Research (CEPR), pp. 59-72.

Banga, K., Keane, J., Mendez-Parra, M., Pettinotti, L. and Sommer, L., 2020. Africa trade and Covid 19: The supply chain dimension. Working paper 586. Addis Ababa: African Trade Policy Centre.

Barasa E. W., Ouma, P. O. and Okiro E. A., 2020. Assessing the hospital surge capacity of the Kenyan Health system in the face of the COVID-19 pandemic. PLoS ONE, 15 (7). https://doi.org/10.1371/journal.pone.0236308

Buheji, M., Katiane, C. D., Beka, G., Mavric, B., Carmo de Souza, Y. L., Silva, S. S. and Yein, T. C., 2020. The Extent of COVID-19 Pandemic Socio-Economic Impact on Global Poverty. A Global Integrative Multidisciplinary Review. American Journal of Economics, 10 (4), pp. 213-224. https://doi.org/10.5923/j.economics.20201004.02.

Cavallo, J. J., Donoho, D. A. and Forman, H. P., 2020. Hospital Capacity and Operations in the Coronavirus Disease 2019 (COVID-19) Pandemic-Planning for the Nth Patient. JAMA Health Forum, 1 (3) :e200345. https://doi.org/10.1001/jamahealthforum.2020.0345.

Coulibaly, S., 2021. COVID-19 policy responses, inflation and spillover effects in the West African Economic and Monetary Union. African Development Review, 33, pp. S139-S151.

Craig, J., Kalanxhi, E. and Hauck, S., 2020. National estimates of critical care capacity in 54 African countries. Center for Disease Dynamics, Economics & Policy. http://dx.doi.org/10.1101/2020.05.13.20100727.

Dzigbede, K. D. and Pathak, R., 2020. COVID-19 economic shocks and fiscal policy options for Ghana. Journal of Public Budgeting, Accounting & Financial Management, 32 (5), pp. 903-917. https://doi.org/10.1108/JPBAFM-07-2020-0127.

Ebrahimy, E., Igan, D. and Peria, S. M., 2020. The Impact of Covid-19 on Inflation: Potential Drivers and Dynamics. Research Special Notes Series on Covid-19. Washington, D.C.: International Monetary Fund (IMF).

Erokhin, V. and Gao, T. (2020). Impacts of COVID-19 on Trade and Economic Aspects of Food Security: Evidence from 45 Developing Countries. International Journal of Environmental Research and Public Health, 17, pp. 5775-5803. http://dx.doi.org/10.3390/ijerph17165775.

European Society of Anesthesiology. 2020. Analysis of COVID-19 data on numbers in intensive care from Italy. https://www.esahq.org/esa-news/analysis-ofcovid-19-data-on- numbers-in-intensive-care-from-italy-european-society-of-anaesthesiology-esa.

Hausman, J. A., 1978. Specification Test in Econometrics. Econometrica, 46 (6), pp. 1251-1271.

Hurnik, J., Kober, C., Plotikov, S. and Vavra, D., 2020. Socio-economic Impact Analysis of COVID-19. UNICEF. https://www.unicef.org/ethiopia/reports/socio-economic-impact-analysis-covid-19.

IEA. 2020. Oil Market Report - August 2020. https://www.iea.org/reports/oil-market-report-august-2020 [Accessed on September 12, 2020].

Institute for Health Metrics and Evaluation. 2020. Forecasting COVID-19 impact on hospital bed-days, ICU beds, ventilator days, and deaths by US state in the next 4 months. https://doi.org/10.1101/2020.03.27.20043752.

Im, K. S, Pesaran, M. H. and Shin, Y., 1997. Testing for Unit Roots in Heterogeneous Panels. Mimeo, Department of Applied Economics: University of Cambridge.

Jelilov, G., Iorember, P. T., Usman, O. and Yua, P. M., 2020. Testing the nexus between stock market returns and inflation in Nigeria: Does the effect of COVID-19 pandemic matter? Journal of Public Affairs, e2289. https://doi.org/10.1002/pa.2289

JHU CSSE. 2021. Coronavirus (COVID-19) Statistics Data. New Cases and Deaths. John Hopkins University: Center for Systems Science and Engineering.

Kassa, W., 2020. COVID-19 and Trade in SSA: Impacts and Policy Response (Issue 1, No.1). Washington D.C.: World Bank.

Leive, A. and Xu, K., 2008. Coping with out-of-pocket health payments: Empirical evidence from 15 African countries. Bulletin of the World Health Organization, 86 (11), pp. 849-856.

McKibbin, W. and Fernando, R., 2020. The Global Macroeconomic Impacts of COVID-19: Seven Scenarios. Asian Economic Papers, 20 (2), https://doi.org/10.116/asep_a_00796.

Mold, A. and Mveyange, A., 2020. The Impact of the COVID-19 Crisis on Trade: Recent Evidence from East Africa. Washington D.C., United States: Brookings Institution.

OPEC. 2021. OPEC Basket Price. https://www.opec.org/opec_web/en/data_graphs/40.htm

Pesaran, M. H., Shin, Y. and Smith, P. R., 1999. Pooled Mean Group Estimation of Dynamic Heterogeneous Panels. Journal of the American Statistical Association, 94 (446), pp. 621-634.

Pesaran, M. H. and Smith, R. P., 1995. Estimating Long-Run Relationships from Dynamic Heterogeneous Panels. Journal of Econometrics, 68, pp. 79-113.

Rahman, S. M. D., Hossain, I., Mullick, R. A. and Khan, H. M. (2020). Food security and the Coronavirus Disease 2019 (COVID-19): A systemic review. JMSCR, 8 (5), pp.180-184.

Tsai T. C., Jacobson, B. H. and Jha, A. K., 2020. American Hospital Capacity and Projected Need for COVID-19 Patient Care. https://www.healthaffairs.org/do/10.1377/hblog20200317.457910/full/

Verhagen, M. D., Brazel, D. M., Dowd, J. B., Kashnitsky, I. and Mills, M. C., 2020. Mapping hospital demand: demographics, spatial variation, and the risk of “hospital deserts” during Covid-19 in England and Wales: Oxford.

Vickers, B., Ali, S., Zhuawu, C., Zimmermann, A., Attaallah, H. and Dervisholli, E., 2020. Impacts of the COVID-19 pandemic on food trade in the Commonwealth. International Trade Working Paper 2020/15. London: Commonwealth Secretariat and FAO.

World Bank. 2020. Global economic prospects, June 2020. Washington D. C.: World Bank. https://doi.org/10.1596/978- 1-4648-1553-9.

World Health Organization. 2020. Naming the coronavirus disease (COVID-19) and the virus that causes it. Coronavirus disease technical guidance. https://www.who.int/emergencies/diseases/novel-coronavirus-2019/technical-guidance/naming-the-coronavirus-disease.