IFC Insights: Ebola-era Lessons for the Private Sector

By Alison Buckholtz

Stefan Dercon

Stefan Dercon

When Stefan Dercon worked in West Africa at the end of the Ebola epidemic, he witnessed vast disruptions throughout the private sector—and then, as the crisis receded, he tracked how a “new normal” reshaped business practices and economies. As Chief Economist at the UK’s Department of International Development (DFID), he and his team translated this data into strategic advice to contribute to the region’s economic recovery. Now he’s at Oxford University, as a Professor of Economic Policy at Blavatnik School of Government and the Economics Department. IFC Insights reached Dercon at his home in Oxford to ask him how the lessons of the Ebola epidemic can inform the private sector’s response to COVID-19. The interview has been lightly edited for length and clarity.

Q: What should the private sector be doing right now, while the pandemic is still in full force, that will help strengthen economic recovery?

From my experience with the Ebola crisis in Sierra Leone and Liberia, I saw how important it is to collect data to discover how the crisis is working through the economy, and then respond quickly and flexibly to that data. For example, in Sierra Leone, we saw the farmers were not really affected in the way many had predicted, and agricultural markets remained intact while the urban sector was more strongly affected. This real-time data produced better responses from the public sector but also from the private sector, showing where opportunities were. Avoiding the “grand gesture” in favor of a tailored action informed by data is key. We can do this now, better than often is assumed, because of new ways of collecting information—including telephone surveys, mobile phone data, and other digital data.

The message to the private sector is to document locally in developing countries how the value chains are affected and where the biggest bottlenecks are, and respond by changing your focus as you go.

Q: What does the opposite of the “grand initiative” look like?

At this stage we do need the grand initiative, the big checks. No one knows how the crisis is working through the economy and obviously this a dramatic shock to economies. Firms as well as people’s lives are deeply affected by this crisis. It’s going to cost quite a lot of money to cushion the impact and then recover from this pandemic. But we need to start with the data and the feedback loops now. We have to try to set up monitoring mechanisms to get a market-level perspective that is very targeted. There needs to be as much liquidity as possible to achieve a well-oiled financial system.

Over time, we must do this better. Of course, first we must make sure that health services are well funded. When it comes to the economy, you will have a lot of groups lobbying for money in the economy, but the wrong people getting liquidity will not help an economy recover.

Nurse Helena D. Sayuoh wears protective gear while working at a hospital in Liberia in 2015.

A portrait of Helena D. Sayuoh a nurse, wearing protective clothing while working at C.H. Rennie Hospital in Kakata, Margibi County in Liberia onMarch 4, 2015. Photo © Dominic Chavez

Q: At this point in the pandemic, what should the private sector be doing to adjust?

The private sector’s strength is its entrepreneurial spirit and expertise in innovation. So there will be opportunities for private sector firms. Here in Oxford we are now doing seminars using Zoom, and in universities there are so many active conversations about how we can do even more online learning. For anyone running online platforms, this is the opportunity to innovate, test how good their systems are, collect feedback, and improve their products—because many of us will never leave these platforms after discovering their utility.

For developing countries that can invest in Internet-enabled services, this presents a huge opportunity. As this crisis helps us get used to more online service delivery, more can be outsourced. If I was an Internet-enabled firm in South Asia, I would be thinking through how to prepare to offer a whole series of services that can be tried out now, and then build up the company. Firms that can keep themselves going will start thinking of different business practices and explore them.

Q: You’ve talked elsewhere about watching countries scramble for money after the Ebola crisis, and you said, “It’s essentially financing as if we’re still in the 11th century, where the only financial instrument we have to deal with disasters is going around with a begging bowl.” How can financing be more effective during COVID-19?

After the Ebola crisis we saw “one solution fits all” efforts. Rather than having one system, it would be better to have a portfolio of mechanisms that can help countries recover. To do this, I see private and public working together to handle the “unknown unknowns” of the 21st century. With private and public working together, everyone does what they’re best at.

A concrete example is vaccine research. A pharmaceutical company can do research, but it’s risky to speed up the process by more than 18 months, although society needs a vaccine as soon as possible. A single private sector firm cannot take the risk of introducing a vaccine on an accelerated schedule—it has no guarantee for success, and trials take time. So each of them will wait to block-book trial capability or manufacturing for these specialized products until it is quite certain of success, working sequentially as the chances for success are small for a single team or company. However, the public wants the vaccine at 1 billion doses the moment the basic efficacy and safety are proven.

A group of private sector firms supported by the public sector can help de-risk this process, each firm still working separately but not in a winner-takes-all tournament. Scientists and manufacturers have told me that pooling the risk of developing the vaccine would help move up vaccine production by six or even 12 months by doing a lot of things in parallel. This is ex-ante diversification of risk. Given the cost to the economy of this pandemic, surely we should do this.

UNICEF coordinators and volunteers using illustrations to help educate people about the Ebola outbreak on March 12, 2015 in Freetown, Sierra Leone. These families are being held in a quarantine because one of their neighbors contracted Ebola.

UNICEF coordinators and volunteers using illustrations to help educate people about the Ebola outbreak on March 12, 2015 in Freetown, Sierra Leone. These families are being held in a quarantine because one of their neighbors contracted Ebola.

Q: How will this pandemic affect the investment climate and private sector initiatives in fragile states?

The slowdown of the global economy is bad news for poor and developing countries. But I’d like to say something positive about this. I was in Eastern DRC (Democratic Republic of Congo) three weeks ago. Businesses there endured the Ebola crisis and found ways of functioning partly because firms that survive in fragile states tend to be quite resilient. It will be for some of them another serious challenge to deal with, but firms there are used to working under conditions that in Western countries would not be endurable.

Without wanting to underestimate the challenges that COVID-19 will bring for them, I am less worried about resilience in fragile states per se, but I am much more worried about the effect on the investment climate across a broad range of countries, not least in sub-Saharan Africa. Countries that are trying to attract more investment will face a serious setback. That applies to lots of poor and developing countries, which did serious, important work to attract investment. The results will now be delayed, and therefore development will be delayed, again. Anything we can do to turn our attention early on to these countries would be most welcome.

Published in March 2020

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