Taking stock of Covid-19

Jo-Maré Duddy

A quarterly loss of nearly N$78.5 million for the medical aid industry in Namibia, following one of about N$141.1 million – more figures confirming how devasting Covid-19 has been to the country.

Just over two years after Namibia recorded its first Covid-19 positive case, the tally of the cost of the pandemic keeps rising.

The latest statistics of the Namibia Financial Institutions Supervisory Authority (Namfisa) show medical aid funds in the country settled claims of more than N$2.35 billion in total in the second and third quarters of last year – some 28% more than the N$1.83 billion in the same two quarters of 2020.

As the Delta variant ravaged the country, the funds settled more than N$1.7 billion in total in claims to doctors, specialists, medicine and hospitals. Compared to the second and third quarters of 2020, this was an increase of about N$400 million or 31%.

The medical aid industry suffered a net loss of about N$141.1 million in the second quarter of 2021, followed by a net loss of nearly N$78.5 million the following three months. In the corresponding quarters in 2020, the industry reported net surplusses of N$206.4 million and N$72.6 million respectively.

Namfisa attributed the industry’s predicament to the third wave of Covid-19.

“The future impact of Covid-19 will be monitored as the pandemic persist and the medical aid fund industry will be required to implement more stringent risk management protocols to avoid threats to the industry’s viability,” Namfisa said.

In their update report, “Taking Stock and Looking Ahead”, Simonis Storm (SS) said a total of 979 582 Covid tests were done at a total cost of about N$832 million in the period up to 24 March 2022.

CASUALTIES

Covid-19 has claimed lives and jobs. In their report, SS analysed data from the ministry of health and social services from August 2020 to March 2022.

Pointing out that deaths could have been under-recorded in the ministry’s figures, SS said 1 226 people in the age group 30 to 59 lost their lives due to Covid-19 in the period under review. Assuming that each of these individuals had partners and children and were employed full-time, then 3 678 individuals lost a source of income and a financial safety net, SS said.

“Depending on whether the deceased individuals had adequate life and funeral cover, the surviving family would be left worse off financially.”

According to the data, 3 534 people died due to Covid-19 or Covid-related causes in the two years under review – most of them (808) in 60-69 age bracket. The second most affected group was 50 to 59 years old, with 657 people dying.

SS described the latter as “concerning”, saying they were part of the working age population and most likely had partners and children in their financial care”.

Of the total death toll, 371 people were aged 40 to 49, while 198 fell in the 30 to 39 category.

Deaths with comorbidities - Covid-19 patients who died and had underlying health issues or other diseases – constitute 73.2% of total deaths between August 2020 and March 2022.

SOCIAL TOLL

National lockdowns have led to secondary mental health effects as a result of keeping individuals isolated in confined spaces, SS said.

Different countries across the globe have seen a rise in alcohol and drug abuse, suicides and mental disorders such as depression.

“While mental health statistics are very hard to come by in Namibia, we know that these factors have increased in Namibia following the lockdown, based on discussions with both private and public psychiatric healthcare workers,” the analysts said.

SS added: “In addition to mental health effects, long-term aftereffects of Covid such as lung and brain damage, breathing problems, heart complications, etc. also pose as long run economic and social costs (e.g. work disruptions due to illness).”

A rise in these social issues and mental health disorders can have long-term impacts on labour productivity, educational outcomes of young people and misallocations in household budgets away from basic care spend to alcohol and drugs for example, SS warned.

“These risks do not receive sufficient attention in the policy environment and could lead to socioeconomic costs incurred by the economy in future,” they said.

INSURANCE INDUSTRY

According to SS, Namibia’s long-term insurance industry paid out N$13 billion in claims between the second quarter of 2020 and the third quarter of 2021, while earning N$12.3 billion in investment income.

“Hence, total claims exceeded investment income during this period, placing pressure on long-term insurance companies,” the analysts said.

Namfisa latest data shows the long-term insurance suffered a loss of N$143.9 million in the second quarter of last year, followed by a loss of nearly N$173.8 million in the next one. In the same quarters in 2020, the industry reported profits of N$197.4 million and N$515.5 million respectively.

Namfisa attributed the “significant” decrease to “an underwriting loss experienced as a result of increase in claims paid due to high Covid-19 death and funeral claims”.

The number of policies terminated in the third quarter of last year increased by 54% despite relaxed Covid-19 measures during the period under review.

According to Namfisa: “This could still be attributed to the Covid-19 after-effects that continued from the second quarter of 2021. The funeral, credit life and fund risk class of insurance contributed the most to the policies terminated during the third quarter of 2021.”

Commenting on the stats, SS said: “Since March 2020, we had numerous employees across different sectors who were offered early retirement packages, about 15 000 retrenchments and the liquidation of Air Namibia. This could have led to numerous one-third tax free benefits being withdrawn from pension funds and potentially individuals withdrawing monthly salaries from their pension funds (if they converted their pension funds into living annuities) to replace lost incomes.”

FISCAL POLICY

Government announced a fiscal stimulus package of about N$9.1 billion or about 5% of the country’s gross domestic product (GDP) in 2020 to help mitigate the impact of the pandemic.

According to the International Monetary Fund (IMF), the average advanced economy managed to mobilise 8.5% of GDP in discretionary fiscal support, SS pointed out.

“The average for middle-income countries or emerging markets was 4% of GDP and 2% of GDP for low-income countries. With Namibia being classified as an upper-middle income country by the World Bank, Namibia’s 5% of GDP fiscal stimulus came in slightly above the middle-income country average,” SS said.

The stimulus package was about 12.6% of total government expenditure in the 2020/21 and widened the budget deficit as a percentage of GDP from -3.0% to -8.1%.

According to SS: “Total government debt increased by N$5.6 billion between April 2020 and September 2020 (from N$101.2 billion to N$106.8 billion). This implies that the government borrowed N$30.6 million every single day while we were on lockdown.”

Commenting on the effectiveness of the stimulus package, the analysts said: “Whether these policies were effective at protecting jobs, preventing gains in poverty alleviation being lost and stimulating economic growth is largely debatable.”

They refer to Afrobarometer surveys, which indicated that 57% of Namibians were “not satisfied at all” with the support offered to vulnerable households during the pandemic. “Alarmingly, 68% of Namibians believe that ‘some’ or ‘a lot’ of the resources intended for the pandemic response were lost or stolen due to corruption,” SS said.

GOING FORWARD

Namibia needs to rethink its approach to future viral pandemics, SS said.

“We cannot respond to future health risks stemming from viral outbreaks with a national lockdown. About 70% of respondents in our Economic Outlook 2022 Report said that viral pandemics will become part of our lives every 10 to 15 years and this view is widely held in other countries as well. However, Afro barometer surveys indicate that 64% of Namibians believe the government is not prepared to deal with future health emergencies,” they elaborated.

One of the lessons Namibia should learn from the Covid-19 pandemic is that the country should cultivate a discipline of being forward looking and bolster itself during good economic times to be better prepared for future crises.

“This pandemic is not something to forget about and move forward; we have to learn from this experience and put plans/policies in place to effectively deal with future pandemics. We as a democratic nation need to keep our leaders accountable to ensure that social and economic interests are considered in dealing with future pandemics,” SS said.

With regards to the economy, structural reforms that improve the ease of doing business, creating a probusiness environment and eliminating outdated legislation and prohibitive regulations will go a long way to improve Namibia’s economic growth rates, long-run economic development, poverty alleviation and improved scores on the Human Development Index, the analysts continued.

“Otherwise, we will not see private sector-led growth taking shape in future.”

Namibia should also improve the ease of obtaining statistics on various aspects of the economy and socioeconomic issues which will allow researchers, policy advisers and economists to provide data driven recommendations and solutions to various problems, SS said.

“This will allow for tailored data driven solutions to Namibia, instead of following the global crowd in decision making. Using our own circumstances as inputs to our decisions, together with our own data, will lead to independent and appropriate decisions to future pandemics in Namibia,” they conluded.