Researchers root for trust funds to manage pandemic-related economic inequalities

December 1, 2021, Nairobi, Kenya –Academic stakeholders have proposed the use of trust funds to manage pandemic-related economic inequalities in a bid to mitigate growth challenges in the wake of the COVID-19 pandemic.

Speaking during an international Virtual Research Workshop hosted by the African Economic Research Consortium (AERC, University of Nairobi Professor of Economics Germano Mwabu said dedicated Trust Funds in Africa would come in handy to finance what he described as “Covid-19 like crises” to reduce economic inequality challenges.

In his presentation, Mwabu said trust funds would work better as conventional mechanisms that initiate and sustain pro-growth poverty reduction have been proven ineffective in times of the Covid-19 pandemic.

He noted that further research would be required to identify how Governments in Africa could have implemented anti-Covid-19 measures with minimal economic disruptions.

“In a pandemic such as the Covid-19 period, policies designed to sustain the virtuous spiral of pro-poverty reduction growth should focus more on addressing effort-based inequalities than those due to circumstances. A Trust Fund to finance Covid-19 like crises is needed,” said Mwabu.

He added that “The mechanisms that initiate and sustain pro-growth poverty reduction would not work in times of Covid-19 as the resource transfers that trigger poverty reduction would be directed, as they should, to saving and protecting lives, rather than to poverty reduction.”

Further, resources to sustain pro-growth poverty reduction, he explained, would be constrained as pandemics destroy and disable human capital. Economic research he noted has also established that school closures slow human capital formation.

“In effect, the large social protection programs required to trigger pro-growth poverty reduction in Covid-19 times would be infeasible in Sub Sahara Africa,” Prof Mwabu said.

The 55th AERC Plenary Session of the Biannual Research Workshop explored the theme: Poverty, Growth, Redistribution and Social Inclusion in Times of Covid-19 Pandemic in Africa.

United Nations University World Institute for Development Economics Research (UNU-WIDER) Research Fellow Simone Schotte, who also spoke during the workshop, said that lockdowns had slowed down recovery prospects noting that the labor market is still suffering from anxiety; despite signs of recovery.

The workshop’s plenary session brought together hundreds of economic policy researchers, scholars, public policymakers, non-state actors, and practicing economists.

 AERC Executive Director, who is also the former Central Bank of Kenya Governor Professor Njuguna Ndung’u assured that the global think tank would continue supporting such forums to foster economic affairs awareness.

“Such plenary sessions have informed, influenced, and inspired researchers and the wider public on a wide range of issues relevant to policymaking. The 55th AERC Biannual Research Workshop Plenary Session specifically sought to lead and explore a viable path to recovery from COVID-19,”  Ndung’u said.

Research indicators, Prof Ndung’u, confirmed indicate that policy responses to combat the pandemic led to significant social and economic disruptions.