Lessons from the pandemic: pre-crisis actions matter most

• Sunday Times13 Jun 2021HERMAN WARREN ? Warren is Africa director for The Economist Corporate Network. This is an edited version of a speech he delivered at the Sunday Times Directors Event on Friday

In late 2019 and even into early 2020, few anticipated the impact of the novel coronavirus. At The Economist Group we were watching events before the virus we now know as Covid-19 even had a name. As the first two months of last year elapsed, coverage of the virus moved from below the cover of The Economist to on it. But admittedly, in the early part of 2020, I would argue there was an underestimation of the subsequent human and economic toll in store. However, as events unfolded, that quickly changed, and the outlook shifted to a much more foreboding quadrant.

The pandemic has brought to the fore the importance of proximity. Our ability to rub shoulders, figuratively and literally, underpins health, wellbeing and livelihoods.

As the warning signs increased, Africa was very proactive in attempting to flatten the curve. Regional leaders by and large acted with sobermindedness and were science-led. Africa had the advantage of having institutions, mechanisms and experience attuned to dealing with various infectious diseases. Demographics were on the region’s side. Also, leaders had the benefit of observing and learning from the successes and shortcomings of various jurisdictions as the viral wave washed over Asia, Europe and other shores.

Undoubtedly, regional leaders were aware that, relatively speaking, Africa’s health-care systems suffered a dearth of resources, from the number of hospital beds to personnel to personal protective equipment, ventilators and other categories of nonpharmaceutical interventions. But leaders’ quick, decisive action undoubtedly saved lives.

However, the blunt instruments of lockdowns and social distancing cannot be a constant, particularly in a region where 86% of the workforce occupies the informal sector. A sustainable cure was required. The virus set off a frantic race for a vaccine, and viable and safe candidates were produced in record time. Nonetheless, the pandemic is shining a light on deficiencies and inequalities both within and across nations. In far too many instances those paying the heaviest price are the least capacitated to shoulder the burden: hourly workers; those without the option to work remotely; those without access to adequate health care; and middle-income countries — home to 75% of the world’s population and just 33% of global GDP — have been hit particularly hard.

In SA and other countries, we must be honest that the sowing of poor governance and poor decision-making over years has been reaped in the bitter fruits of lack of adequate water and sanitation, insufficient power generation, lack of access at all or affordably to ICT infrastructure/ services, high unemployment, and limited fiscal space to respond with the same largesse as wealthier nations.

Wealthier nations too struggled and continue to do so with the virus. However, Organisation for Economic Co-operation and Development nations pulled levers that middle-income and poorer nations could not. Trillions of dollars have been added to these governments’ balance sheets and debt-to-GDP ratios are well above 100% in the OECD. These injections are raising concerns about inflation and the potential need to increase interest rates, which could scupper fragile recoveries and unsettle the global financing system. To be sure, last year six countries defaulted on their debts.

At The Economist Intelligence Unit our basecase forecast is that the recent and sharp rise in inflation (for example in the US) is short term in nature, and that low interest rates will remain a feature over the near to medium term. Nonetheless, the inflation outlook is an area to keep an eye on.

As we moved through the latter part of 2020 things began to look less gloomy (economically speaking). Last year the global economy contracted 3.8% (which was much better than the 5.3% forecast at a point in time in 2020).

In 2021 the economic outlook is brighter. World GDP will grow 5.2%. SA’s and the wider Africa region’s key trading partners are all in the proverbial black. Sub-Saharan Africa, however, will have the weakest recovery among the sub-regions of the global economy. This year Sub-Saharan Africa’s GDP will grow 2.1%, weighted by the economic performances of the region’s two largest economies, SA and Nigeria.

Fundamentally, however, economic recovery will not be assured until and unless we tackle the virus. No-one is safe unless we all are.

A pandemic was not something unknown as a risk. Pandemics have been a feature of human history for millennia. Disappointingly, this one clearly was not handled well, coming at the cost of millions of lost lives, livelihoods lost or negatively impacted, and although there will be economic growth this year it will come off a lower base. SA’s GDP is unlikely to return to its 2019 level until early 2024 — we’ll experience four lost economic years.

As part of my work as Africa director for The Economist Corporate Network I engage with executive and nonexecutive leaders to help them raise their gaze, ask better questions and make more informed and effective decisions. In many of my interactions, particularly over the last year, a resounding message comes through: the pandemic didn’t change firm strategy; it confirmed its appropriateness; it accelerated the need for its implementation, as well as trends under way; in short, the pandemic exposed weaknesses and strengths along a number of key dimensions and provided answers to pertinent questions.

No-one has a crystal ball. As leaders we deal with uncertainty, complexity, volatility, we consult stakeholders, distil risks and opportunities, develop scenarios, apply probabilities where appropriate and make calls with varying degrees of conviction and confidence.

Motivational speaker Les Brown said: “If you do what’s easy your life will be hard; if you do what’s hard your life will be easy.” The pandemic has reinforced the importance of doing the basics right, as well as addressing the hard things consistently.

In a couple of years we’ll mark the 60th anniversary of the March on Washington where Martin Luther King Jr delivered his celebrated “I have a dream” speech. Nearly six decades later the weighty words he eloquently strung together on that day still resonate. The aspect from that address I call your attention to is where he cited “the fierce urgency of now” — he indicated this is no time “to take the tranquillising drug of gradualism”.

I ask you to reflect on the question: what is fierce and urgent or likely to be? What is the writing on your wall indicating? What should you be doing in the spaces you occupy and are charged with improving to address the most important issues at hand or with the potential to materialise?

My message today is, let’s never take ourselves too seriously (humility is a virtue), but let’s take what we do seriously. Let’s hold ourselves to a higher standard and expect in a constructive fashion no less from others — suppliers, staff, politicians and so on.

It will take some time to recover the economic ground lost, particularly in middle-income countries like SA. Nonetheless, globally the lights of recovery are doing more consistent shining than flickering (notwithstanding what your own lights may be suggesting with your bouts of loadshedding). There will undoubtedly be unforeseen circumstances and curveballs thrown our way. What matters is not just what we do during a crisis but what we do before it. I would argue the precrisis actions matter most. Let that be a key lesson we take from this pandemic and this time and space we have the privilege of occupying.