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Vaccine inequality in poor states

By Tafara Mtutu

IT is almost two years since Covid-19 was declared a global pandemic and almost a year since the first vaccine was approved by the World Health Organisation (WHO). Today, the world has several vaccines to choose from, but the pandemic continues to remain a critical issue. Among many issues hindering the global community’s resolute win against Covid-19 is lack of vaccine equity.

Vaccine equity refers to the equitable distribution of Covid-19 vaccines across all countries, regardless of economic, developmental, or social status. This mandate has been undertaken by WHO, the United Nations Children’s Fund (Unicef) and GAVI, The Vaccine Alliance, who jointly run Covax, a facility meant to accelerate the development, production, and equitable access to Covid-19 tests, treatments, and vaccines.

Despite the effort of the Covax facility, there has been growing vaccine inequality since the widespread distribution of approved vaccines began.

According to data from the UN Development Programme, total Covid-19 vaccines administered per 100 people in high income and upper middle-income countries are estimated to be 133 and 126, respectively.

On the other end are the lower-middle income and low-income countries, whose total Covid-19 vaccines administered per 100 people currently averages 53 and four, respectively.

Among many reasons for this vaccine inequality are issues to do with (i) affordability, (ii) production facilities, (iii) poor governance, and (iv) stockpiling by wealthier countries.

Data from GAVI reveals that the average cost per Covid-19 vaccine dose ranges between US$2 and US$40. The figures are higher if one incorporates an estimated distribution cost of US$3,70 per person vaccinated with two doses. The numbers point to a high financial burden in light of the fact that the average annual per capita health expenditure in low-income countries amounts to US$41.

The availability of the vaccines in lower middle- and low-income countries is further hindered by the absence of production facilities in Africa. The African continent, whose economies dominate WHO’s lists of lower middle-income and low-income countries, severely lags in the race to achieve herd immunity.

Currently, the continent has fully vaccinated less than 5% of its total population of 1,3 billion while Europe (50%), North America (44%), Asia (32%) and South America (33%) have a much higher vaccinated population.

This is largely because the continent manufactures only 1% of vaccines that have been administered in Africa so far. Only six countries on the continent — Egypt, Morocco, Algeria, Nigeria, South Africa and Senegal — have manufacturing facilities with a targeted annual production capacity of two billion doses from 2023 and beyond.

However, most of these facilities package imported vaccine substances instead of manufacturing the drugs and still rely on overseas manufacturers for vaccine supplies. Further to this is the poor governance with respect to Covid-19-related funds that have been disbursed to developing and low-income countries in Africa.

Malawi authorities arrested 64 people for the misuse of Covid-19 funds. State-run Kenya Medical Supplies Agency (Kemsa) is entangled in allegations of misappropriation of US$400 million earmarked for the purchase of medical equipment needed in the fight against Covid-19.

In South Africa, cases of over-pricing and abuse of Covid-19 funds have flooded the internet. Among the many cases brought to light is the Digital Vibes scandal that involved the misuse of US$10 million worth of Covid-19 funds.

An audit into the use of South Africa’s Covid-19 relief funds also revealed that, in some cases, personal protective equipment (PPE) was bought for five times more than the price the national treasury had advised.

In 2020, four Ugandan government officials were arrested after being accused of inflating Covid-19 relief food prices, which resulted in the government incurring a loss of US$528 000.

Many other similar cases of poor governance relating to Covid-19 funds have been documented in Nigeria, Zimbabwe, and Somalia with an evident impact on the distribution of vaccines, PPE, and medical equipment in these countries.

Developed countries such as Britain, France, Germany, and the US have also been flexing their financial muscle by ordering and stockpiling vaccines, some before they have been proven to be effective against the virus.

As a result, when these vaccines are finally approved and ready to be purchased by governments and other humanitarian agencies for low-income countries, there is a waiting line with high-income countries at the front.

According to WHO, low-income countries would add US$38 billion to their GDP forecast for 2021 if they had the same vaccination rate as high-income countries.

Further, continued lockdowns that have been on and off in various low-income countries could perpetuate these economic losses as industries and offices are scaled down because of movement restrictions.

In some cases, the loss of critical and knowledgeable professionals in various fields to Covid-19 will also impact the overall economic recovery of the affected countries.

Zimbabwe has fully vaccinated more than 2,6 million of its citizens, or 17,2 people for every 100 people. The statistics are commendable for a low-income country, and we attribute this to the efforts by the government and several private players.

However, we note that risks of another wave remain likely given the resurgence of Covid-19 cases and deaths in many developed and developing countries, who have been aggressive in the fight against Covid-19.

For investors concerned about protecting their portfolio against such risks, we recommend taking long positions in defensive stocks on the Zimbabwe Stock Exchange such as Delta, Innscor, Meikles and OK Zimbabwe.

These stocks often produce, manufacture or retail goods that have a very short shelf-life regardless of prevailing economic constraints. These businesses also have the ability to pass any inflation effects to the consumer with minimal damage to margins.

  • Mtutu is a research analyst at Morgan & Co. — tafara@morganzim.com or +263 774 795 854.

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