As the novel coronavirus continues its silent march across the globe, striking fear into communities and laying waste to their economies, there are concerns the dominant global system of democracy and capitalism might unravel.
The unprecedented suspension of trans-Atlantic travel between friendly and military allies, and the near complete shutdown of economic activity in California and New York and across continental America, has left many people isolated and terrified. Besides declaring a state of national emergency, President Donald Trump has invoked a wartime Defense Production Act to speed up the production and distribution of medical supplies and equipment needed to prevent the spread of the virus as well as for patient treatment.
Reacting to the rapidly unfolding events, the New York Stock Exchange, considered a quintessential symbol of capitalism, went into a financial meltdown, triggering circuit breakers: 15-minute pause to transactions. In less than 10 days, the Dow Jones index had lost almost 10,000 points, a third of its value. Although governments around the world have since taken measures to shore up the markets, pundits warn that this is unlikely to calm spoked investors.
It is impossible to calculate the full financial and economic cost of Covid-19. To cushion households against the inherent loss of jobs and incomes, developed countries are mulling over issuing stimulus packages. But for a people saddled with debt, this will hardly make a difference, especially if the shutdown drags on for weeks.
Others doubt the ‘stimulus’ aspect if it’s not possible to have normal economic activities. Furthermore, the crisis is causing an irrecoverable loss of man-hours and productivity.
In the United States, the pandemic might create a severe imbalance in the education sector, so much so that the State may be forced to provide free college education for all, at least to permit families to adjust. In fact, the steering of private enterprise by the State to produce public goods, coupled with stimulus cheques, mandatory State-funded coronavirus screening and treatment and the possibility for a partial or complete write-off of privately held debt sounds more of Bernie Sanders’s democratic socialism than capitalism.
While the coronavirus is slow in making its way to Africa, the continent must be prepared for a devastating blow, beyond the loss of life. The pandemic is a harbinger of bad things for the corrupt and despotic governments, especially those short of financial capital and political legitimacy. The virus is likely to erase tax revenues and empty treasury vaults.
The future is bleak for a people whose government lacks the financial capacity to provide basic services. But it would be unwise for Africa to expect help from the industrialised nations as most of them are likely to be sorting out their own mess.
In our case, the government’s rush to close schools and shutter businesses in an ailing economy with no jobs may complicate its financial troubles.
But there is also a possibility for a brighter side to the impending crisis. It could undermine the foundations of the many corrupt African governments and cause them to fall, and in their place rise popular, progressive, responsive and pro-poor regimes. It could end crony capitalism and appalling inequality by impoverishing and bankrupting owners of illicit wealth.
China could once again look to Africa for opportunities to restart its quest for global political and economic dominance by offering new infrastructure, technology and trade deals.
Beijing could opt to write off all loans that are considered debt traps, including our costly and suboptimal SGR. It could offer to fund and implement transformative projects like Lapsset and extending the SGR line to Malaba and beyond.
Given the palpable regret in the current government, Kenyans would pray that such a scintillating possibility only happens after we have started on a clean slate, with new faces in State House and Parliament.
Mr Chesoli is a New York-based development economist and global policy expert. [email protected] @kenchesoli