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The Pandemic and Africa's Social Safety Net

The COVID-19 pandemic has shown that African tax and social-benefit systems are currently ill-equipped to protect households from sudden income losses. Meaningful progress will require policymakers to reduce the size of the informal sector and improve the design and financing of social-protection measures.

HELSINKI – Researchers around the world have studied the labor-market effects of COVID-19 since spring 2020. The statistics suggest that last year’s economic slowdown was more severe than the 2009 downturn resulting from the global financial crisis, and extended to all regions. The pandemic triggered a surge in unemployment across developed economies and halted progress in reducing poverty and hunger in several lower-income countries.

Economists have begun to devote more attention to the role of national tax and benefit systems in protecting households during the pandemic. Most of the research to date has focused on developed countries such as Finland, Germany, Italy, and the United Kingdom, but recent studies have analyzed tax and social-protection schemes in South Africa, Indonesia, and the Andean countries.

Now, a new United Nations study has measured the impact of tax and benefit systems in Sub-Saharan Africa (SSA) during the COVID-19 crisis, providing an important complement to the research on high- and middle-income countries. The study used national tax-benefit microsimulation models to evaluate the distributional effects of different policy measures during the first stage of the pandemic in Ghana, Mozambique, Tanzania, Uganda, and Zambia.

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