Tag: Economics

  • Economics of Ebola Virus outbreak

    Economics of Ebola Virus outbreak

    International rating agency Moody’s has warned that besides the death toll, the outbreak will cause “critical commercial and transport disruptions” in the affected West African countries, leading to “significant” economic and fiscal damage, writes CBC News

    In the world of business, there is a saying that markets are driven by fear and greed. As shares in drug companies surge, the Ebola virus has already unleashed the power of greed. And as we watch the coverage of the disease move into what many commentators have labeled irrational hysteria, some people are finding ways to tap the power of fear.

    Joel Kettner of the International Centre for Infectious Diseases in Winnipeg says that when it comes to infectious diseases, fear is not clearly good or clearly bad.

     

    “It can be both,” he says.

    Most medical experts say Ebola’s contagion in the global consciousness has outgrown the disease’s actual risk. One of the people pointing that out is Seth Berkley, head of the GAVI Alliance, a group that promotes developing world health through vaccination.

    “It starts with familiar flu-like symptoms,” he wrote on the BBC Health site. “But within days this can quickly descend into something more exotic and frightening: Vomiting and diarrhoea, followed by bleeding from the gums, the nose and gastrointestinal tract.”

    But the disease Berkley is describing is not Ebola but Dengue shock syndrome. Caused by a mosquito-borne disease, the latter kills about 20 times more people worldwide every year than the confirmed death toll from the current Ebola outbreak (although the numbers are changing constantly).

    Despite the wall-to-wall coverage of Ebola as the latest terrifying plague, its ranking in the death pecking order is negligible. Latest estimates from the World Health Organisation show that, for example, between one and two million people die of AIDS every year.

     

    Fear as motivator

     

    According to Berkley, the reason the developed world fears Ebola despite its low risk of spread in the developed world is that the idea of an untreatable disease is foreign to us and stimulates long-forgotten fears.

    There is no doubt some truth in Berkley’s analysis, but as a participant and a critic of the influence of media on our lives, I don’t think we can absolve the people in my business. During the quiet summer news cycle, the news media are partly implicated in stimulating a disproportionate horror of Ebola, just as they did with H1N1 and SARS.

    Unlike many other commentators, however, I think this could be a good thing.

    And with some reservations, Joel Kettner agrees. Fear is motivating, he says.

    Certainly, in parts of West Africa where the disease is spreading, fear – of hospitals, of western medicine, of neighbours — is part of the problem.

    Fear is closing borders, shutting down trade, seriously damaging local and national economies. Liberian Finance Minister Amara Konneh recently said due to the Ebola outbreak, the country’s growth forecast “is no longer realistic.”

    International rating agency Moody’s has warned that besides the death toll, the outbreak will cause “critical commercial and transport disruptions” in the affected West African countries, leading to “significant” economic and fiscal damage.

    Fear can also help the disease spread. The frantic urge to escape areas where the Ebola virus is present can make it worse. “You’re not leaving the risk behind,” says Kettner. “You’re just carrying it to another location.”

    As a result, Kettner says there is a “reasonable expectation” that people will arrive in Canada or other developed countries who may have been exposed to the virus and won’t get sick until after their return. Fear of that happening is already prompting Canadian health authorities to dust off their preparedness skills, which were learned during the SARS crisis.

    Kettner also observes that global media fears and a sense of crisis have awakened new interest in companies and agencies working on cures and vaccines. Although its shares have fallen from their highs earlier this week, Canada’s Tekmira Pharmaceuticals gathered worldwide attention and credibility for its experimental Ebola drug.

    Despite a rollercoaster ride on the market, Tekmira’s shares are still worth nearly twice as much as they were a month ago, giving the company better access to capital to do its work. And Tekmira is not alone. Suddenly, investors are also interested in BioCryst, MAP BioPharma and others because of their “race to combat Ebola.”

     

    The upside of panic

     

    In an article ostensibly telling us to beware trading in Ebola virus stocks, Turney Duff, a former Wall Street trader and author of The Buy Side, actually gives instructions on how to profit from health scares.

    “The last thing you want to do when news breaks is try to find the right stocks to trade,” Duff wrote on CNBC.com. “Back when I was a health-care trader and the SARS virus had the world’s attention, we broke down every sector to see how it could be impacted.”

    Pharmaceutical companies – and those that invest in them – can benefit from outbreaks by creating and selling drugs to fight diseases.

    While critics of the pharmaceutical industry may fulminate against the ethics of profiting from poverty and disease, the fact is, the wave of fear over Ebola means the virus is punching far above its weight compared to other developing country diseases. After all, the pharmaceutical industry is notorious for ignoring diseases of the developing world because poor people can’t pay for expensive drugs.

    But the Ebola scare has actually helped focus minds – and financial resources – on creating treatments that, in a commercial sense, might not justify their development costs.

    Respiratory illness, for instance, kills more than a thousand times more people than Ebola.

    A recent recurrence of one of those respiratory diseases — H1N1, or swine flu — that swept through Canada in 2009 reminds Kettner of another advantage of the fear of disease and the attention it brings.

    “We became aware that the population of First Nations and other aboriginal people, especially those living in remote and northern communities, appeared to be at higher risk for getting severe [cases of the] disease,” says Kettner.

    He said fear in those communities “was a motivation for focusing on the health needs… and quality of health care in those communities.”

     

    Opportunities to

    improve health care

     

    Fear of a new disease is not irrational. Diseases mutate. And while Ebola is not a perfect candidate, epidemiologists know there is a chance that some new strain of bug will ride our integrated transportation system to sweep the world like a modern Black Death. That would be a personal problem for many of us, but it would also be a very big economic problem.

    Kettner observes that the main causes of disease outbreaks that could spread around the world are not germs, but poverty and poor health care.

    “What I hope will happen from the fear that is generated from the Ebola virus is that there will be more attention paid to the health needs of the communities that are at risk,” he says.

    After years of civil war, with poverty, few doctors and abysmal education levels, the people in the worst affected areas of West Africa are poorly equipped to save themselves from a disease like Ebola.

    Maybe it is a good thing for those of us in the developed world to be afraid, to buy into the current hysteria. Because if we don’t commit the resources to stop the outbreak there, maybe, just maybe, Ebola will soon be coming for you.

  • Africa and the economics of continued exploitation (III)

    In his book, ‘Looting Africa: The Economics of Exploitation’, aspects of which we have been reflecting on for the last two weeks, the South African political economist, Professor Patrick Bond, exposes the sheer intellectual laziness, mental lethargy, ideological bankruptcy and shameful hypocrisy of contemporary African leadership. Reading this book, it becomes obvious that unless there is a radical change in the nature and character of African leadership; the emergence of thinker-leaders who can break out of the underdevelopment-generating mould of intellectual dependency on western imperialism, the Continent’s presumed desire for positive transformation will remain a mirage. The current crop of African leaders certainly do not measure up to the high standard of mental rigour and independence of thought exhibited by the immediate post-independence leadership such as Kwame Nkrumah, Julius Nyerere, Nnamdi Azikiwe, Kenneth Kaunda, Sekou Toure, Obafemi Awolowo, or Jomo Kenyatta to name a few. Of course, this does not excuse the weaknesses of many of these earlier leaders, which, in any case could be blamed on the continuing after effects of centuries of brutal slavery and colonial imperialism on the most abused people in history – the black race.

    Not even the venerable Nelson Mandela and the supposedly progressive leadership of the radical anti-apartheid political movement – the African National Congress (ANC) were spared the scathing critic of Professor Bond. A party like the ANC, whose history of anti-racist and imperial struggle should have positioned it to show the light for Africa to find the way to true mental, political and economic liberation turned out to be just as intellectually famished and ideologically sterile as others across the continent. For instance, according to Bond, Nelson Mandela in 2003 was unsparing in his condemnation of George Bush’s decision to attack Iraq. In Mandela’s words at the time “All Bush wants is Iraqi oil…Their friend Israel has weapons of mass destruction but because it’s (the US’s) ally, they won’t ask the UN to get rid of them…Bush, who cannot think properly is now wanting to plunge the world into a holocaust. If there is a country which has committed unspeakable atrocities, it is the United States of America”.

    Other ANC leaders like Kgalema Motlanthe and Thabo Mbeki echoed Mandela’s vitriolic sentiments but it all turned out to be empty posturing and pointless hot air even if Mandela was more sincere than his ANC colleagues on the issue. Bond calls the rhetoric of the ANC as nothing but “talking left but walking right”. How does Professor Bond prove his point in this respect? In his words “…in early 2003, at the same time as Mandela’s outburst, the ANC government permitted three Iraq-bound warships to refuel in Durban, and the state-owned weapons manufacturer, Denel, sold US$ 160 million worth of artillery propellants and 326 hand-held laser range-finders to the British army, and 125 laser-guidance sights to the US Marines”. Despite strident protests by a coalition of over 300 Anti-war organizations in South Africa against these arms sales, “Pretoria refused the Coalition’s demands to halt the sales”.

    Of course, it is pertinent to wonder if any other army in black Africa could muster the capacity to manufacture and sell such sophisticated weaponry to the military of such world powers as the US and Britain. Is there, one must ask again, a racial tinge to the debilitating technological dependency of Africa? Is there a link between the industrial/technological capacity of South Africa relative to other parts of the continent and the several years of white supremacy rule? But then, that is just an aside. Professor Bond’s point is that South Africa plays a crucial role “as Washington’s sub-imperial African power”.

    Professor Bond contends that once the ANC elevated self-interest above principles compatible with genuine African liberation, then its leaders like Mandela and Mbeki were drawn close by western leaders and South Africa itself was enabled to play key roles in major international bodies like the UN Security Council, the board of governors of the IMF and the World Bank and the United Nations Conference on Trade and Development etc. Perhaps because he is South African, it is understandable that Professor Bond focuses especially on South Africa’s complicity in the subversion of Africa’s interests in the contemporary global political economy.

    It is through his scathing critique and exposure of the utter hypocrisy of the New Partnership for African Development (NEPAD), which pretends to be a home-grown policy platform for the transformation of Africa, that Bond demonstrates the hypocritical collusion between the African leadership and the neo-liberal global elite for the persistence of a mutually beneficial but undesirable present condition of Africa. Incidentally, the major architects of NEPAD included Thomas Mbeki and Nigeria’s President Olusegun Obasanjo who ran administrations pathetically enslaved to neo-liberal policies that have failed in Africa for over three decades now. As a policy document, many believe that NEPAD is infinitely inferior to the Lagos Plan of Action (LPA) drawn up by the Organization of African Unity (OAU) in 1980.

    Bond shows that rather than the African people, it is actually international finance capital that gains from NEPAD through “large construction opportunities on the public-private-partnership model, privatized state services, on-going structural adjustment, intensified rule of international property law and various of NEPAD’s sectoral plans, all coordinated from a South African office staffed with neo-liberals and open to economic and geopolitical gatekeeping”. Among other limitations of NEPAD identified by Bond include its neo-liberal economic policy framework, the complete alienation of the African people from any part in its conception, design and formulation, social and economic measures that contribute to the marginalization of women, its overdependence on foreign donors and its under-emphasis on the external conditions fundamental to the creation and sustenance of the African crisis.

    In the same vein, Bond is critical of such Civil Society Groups as The Global Call To Action Against Poverty (GCAP), Make Poverty History and Live 8 campaigning which simplistically assume that the G8, World Trade Organization (WTO), Bretton Woods institutions and Third World state elites can be part of the solution to the African crisis when they constitute a fundamental part of the problem. Thus, he decries the illusory perception of such groups that the UN Millennium Development Goals (MDGs), for instance, can make any appreciable dent on the gargantuan problem of poverty in Africa.

    He quotes approvingly the following devastating gender-centric critique of the MDGs: “I do not believe in the MDGs. I think of them as a Major Distraction Gimmick. There is evident widespread awareness of their limitations: their inadequate targets and indicators; their restriction to indicators that are quantifiable, when much of what is most important – such as Women’s Equality and Empowerment – is not easily quantifiable…In fact a major problem of the MDGs is their abstraction from the social, political and economic context in which they are to be implemented – the ‘political economy’ of the MDGs”.

    But what are the alternative grassroots initiatives that Bond believes can truly help make poverty history in Africa? That will be the focus of our concluding part next week.

  • Economics students visit EFCC, ministry

    Economics students visit EFCC, ministry

    About 60 students of Economics of Ekiti State University (EKSU) visited Abuja on a four-day educational excursion last week. The students were accompanied by two of their lecturers, Dr J.O. Tawose and Mr S.O. Mojeed.

    The students, who were billed to visit the Abuja branch of the World Bank, could not embark on the trip due to the journey stress. However, about 25 of them visited the bank. They were received by the bank’s officials, who conducted them round the premises.

    Folakemi Alomilagba, 100-Level student, said: “It is my first visit to the northern part of the country. I am looking forward to a memorable visit to the designated offices.”

    The following day, all roads led to the Federal Ministry of Finance on a courtesy call on the minister. They were, however, received by a senior Director in the ministry, Hajia Binta Bello. The students had two hours session with the official, who briefed them on the fiscal policy of the Federal Government.

    On the same day, the students stopped at headquarters of the Economic and Financial Crime Commission (EFCC), where they were received by the officials in the Public Relations department. The students were told the modus operandi of the commission. They were given branded souvenirs of the commission.

    The students also visited Kubwa camp of the National Youth Service Corps (NYSC) and the headquarters of the Central Bank of Nigeria before they returned to Ekiti. The President of the Economic Students’ Association, Adewale Adeyemo, thanked his colleagues for their co-operation during the trip. He also appreciated the management of the university for its support.