The coronavirus severely afflicts livelihoods in developing countries

The global pandemic is not only a risk to people’s health – it causes deep insecurity and fear for people’s livelihoods in countries with weaker social security systems.

The coronavirus affects people in the global South as well as the North but developing countries face an even greater threat because of weaker health care systems. The same goes for restrictions designed to curb the spread of the virus: entrepreneurs that lose their livelihoods do not have the same social security systems in developing countries as in many European countries.

FCA supports livelihoods in 13 countries, such as Nepal, Cambodia and Uganda. Entrepreneurs often start businesses based on handicrafts, mechanics, retailing, local services or farming.

Rural businesses evolve around agriculture or the processing of agricultural products, like the preservation of food. Business activities take place in markets, and sales drop immediately when public gatherings are prohibited and markets closed.

Service-based businesses lose their customers due to movement restrictions and reduced purchasing power. Small retailers and the hospitality sector are hit hard.

Handicraft workers can continue their production as long as they have materials but their sales are affected as well. Any entrepreneur can face difficulties in paying back loans if they lack an income.

Farming usually continues uninterrupted and governments do their best to keep food markets open. Longer term problems arise if the harvested products do not reach the markets, as ability to plant during the next season depends on the income a farmer fetches from each harvest. In addition to individual farmers, this can have a wide-spread effect on the availability of food.

Debt reorganisation key after the corona crisis

Village based cooperatives and saving groups are at the core of FCA’s and the Women’s Bank’s operations. They support their members in various ways, for instance through loans for business development. FCA supported cooperatives can in these cases offer debt reorganisation.

For instance, after the earthquake in Nepal, loans were granted interest-free months. Debt reorganisation and support to resuming business activities are key after the corona crisis.

The income of families is also affected by the reliance on labour migration in low-income countries. In Nepal, as much as 30 percent of the country’s GDP consists of money received from migrant workers. An interruption in their payments has far-reaching consequences at home.

Besides losing their income, hundreds of thousands of migrant workers have difficulties or are not able to reach their families due to travel restrictions, such as closed borders.

The coronavirus is a particular burden for countries that are already fragile, and for families that are already vulnerable. Besides the risk of falling sick or losing livelihoods, families face the threat of food insecurity and children a disruption of their education. Poverty puts people at risk for abuse.

It is crucial that we already look past the pandemic and support developing countries in this global crisis.

Text: Ulla Sarasalmi

Ulla Sarasalmi is Finn Church Aid’s Senior Livelihoods Adviser.