Poor people in developing countries and emerging economies face an existential threat in the corona crisis. However, government assistance is often inadequate. KfW and BMZ are therefore supporting countries in stabilising and expanding social systems.
Sars-Cov-2 has the world in its grip. The virus threatens people's health and lives. All countries are combating the epidemic with restrictions on everyday life, which is causing economic setbacks. In economically weak countries, this hits in particular the ones who are already among the poorest. According to World Bank estimates, the Corona crisis will lead to an increase in extreme poverty in the world for the first time in 20 years. Extreme poverty is defined as a person who has less than 1.90 USD a day. According to the United Nations (UN), up to 100 million people could fall into extreme poverty in the first year of the pandemic. The World Bank considers an increase to up to 150 million people in 2021 possible.
According to a UN report, about half of the estimated new poor live in South Asia, a third in sub-Saharan Africa. Corona measures including shutdown or border closures have a particularly devastating effect on informal and precarious workers, day labourers, migrant workers, street traders. They lose their livelihoods as a result of the various restrictions. And only 29 per cent of the world's population have any form of social security, according to a report by the International Labour Organisation (ILO).
Strengthening and expanding social security systems in poor countries is therefore of particular importance in these pandemic times. KfW and the German Federal Ministry for Economic Cooperation and Development (BMZ) are supporting economically particularly vulnerable groups in a number of African and Asian countries during the corona crisis, as recent examples from India, Jordan, Mauritania, Niger and Mali show.
KfW is providing a total of EUR 460 million for this purpose in India on behalf of the BMZ. Subsidised loans in this amount are spread over a two-phase COVID-19 programme, the total cost of which the Indian government estimates at around USD 23 billion.
In a first step, food was distributed to up to 800 million and cash to 320 million people who were in existential danger due to the consequences of the pandemic. The emergency aid also benefited workers in the informal sector, who make up about 90 per cent of the Indian labour market. Targeted support was provided for the nine million migrant workers, most of whom are not sufficiently integrated into social security systems. In addition, health insurance was provided for people working in the healthcare sector. The majority of beneficiaries are women.
In the second phase of the programme, which is now underway, the Indian government wants to improve the social safety net. Currently, there are still more than 460 different state systems for the transfer of cash and non-cash benefits to the needy in the country with its 1.4 billion inhabitants. The provision is mostly targeted at the rural population, while low-income groups in urban centres and migrant workers do not have access to these support services.
The Indian government, advised by the World Bank, wants to make the social system more efficient and flexible with a far-reaching reform. For example, migrant workers should be able to claim social benefits regardless of their place of origin. In order to distribute aid in a more needs-based manner, federal states and territories will be empowered to draw on national financing instruments.
KfW is also using funds from the BMZ's Corona emergency aid in Jordan to support particularly poor people. The second wave of infection in autumn hit the Kingdom much harder than the first. In relative terms, the country with its ten million inhabitants has more COVID-19 infected persons and deaths than Germany.
KfW is providing EUR 50 million to the Jordanian national social assistance fund NAF for the Arab Government Excellence Award-winning social protection programme Takaful, specifically for its COVID-19 special programme with a total need of EUR 119 million. Around 100,000 impoverished households will receive monthly cash transfers averaging EUR 118 for up to one year to help them survive. The money transfers reach the households via regular bank accounts or so-called e-wallets, an electronic payment system operated via smartphone. Here, too, the transfers primarily go to informal workers who have lost their jobs in the wake of the Corona crisis and do not receive social benefits. However, formal workers who have become unemployed and are not receiving payments due to gaps in their insurance coverage can also benefit.
Jordan's social system is also facing a particular challenge in the Corona crisis due to the high number of refugees. According to the United Nations Refugee Agency (UNHCR), around 650,000 Syrians who have fled the civil war in their homeland live in the neighbouring state of Jordan. Almost a third of the refugees are children of school age. The decline in tax revenues due to the Corona crisis is also affecting Jordan's education budget. Refugee children in particular suffer from this, as they are mainly taught in the afternoons and thus separately from Jordanian children due to a lack of rooms.
KfW has been supporting the school education of Syrian children for some time and is now providing another EUR 27.5 million. This will finance the salaries of more than 7,000 teachers and administrative staff. Most of these teachers work in the afternoon shift, which is mainly attended by children from refugee families. A teacher in Jordan earns the equivalent of around 310 euros per month. One third of KfW's funding comes from the BMZ's Corona aid programme and is used to finance school staff in the regular morning shift. This prevents teachers from becoming unemployed due to a lack of state funding during the pandemic.
A project financed by the BMZ in the three Sahel states of Mali, Mauritania and Niger also serves to strengthen social security in the Corona crisis. They are already among the poorest countries in the world. The pandemic is exacerbating the problems of the most needy through job losses and food price increases.
The KfW programme "Expansion of social protection networks in the context of COVID 19" has a volume of EUR 54 million and is being implemented half by the United Nations Children's Fund (UNICEF) and half by the World Food Programme (WFP), winner of the Nobel Peace Prize 2020. Migrant workers and informal workers, especially women and children, are the target group of the assistance. A total of 1.8 million people in around 270,000 households will receive cash quickly thanks to this support in order to prevent malnutrition.
In addition to short-term emergency aid, the programme also has a prospective component. Thanks to advice and knowledge transfer, the social systems in the three countries are to be adapted in order to become more crisis-responsive, with an increased focus on food and children support.
KfW Development Bank
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