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COVID-19 in Sudan: Impacts on Production, Household Income & Food Systems

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Prepared by Kibrom Abay, Clemens Breisinger, Hosam Ibrahim and Mariam Raouf
International Food Policy Research Institute
Last updated: 28 July 2020

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COVID-19 in Sudan: Impacts on Production, Household Income & Food Systems

  1. 1. Kibrom Abay, Clemens Breisinger, Hosam Ibrahim and Mariam Raouf International Food Policy Research Institute Last updated: 28 July 2020 Contact: Kibrom Abay (k.abay@cgiar.org) or Mariam Raouf (m.raouf@cgiar.org) COVID-19 in Sudan Impacts on Production, Household Income & Food Systems Financial support from We gratefully acknowledge the financial support of the United States Agency for International Development (USAID), which made this study possible under the project “Evaluating Impact and Building Capacity” (EIBC) that is implemented by IFPRI. The information provided in this paper is not official U.S. government information and does not represent the views or positions of the United States Agency for International Development or the U.S. Government. Any opinions stated herein are those of the authors and are not necessarily representative of or endorsed by IFPRI and the Ministry of Planning and Economic Development.
  2. 2. COVID-19 Outbreak & Lockdown Policies in Sudan 1
  3. 3. 0 50 100 150 200 250 300 350 400 450 13-Mar 15-Mar 17-Mar 19-Mar 21-Mar 23-Mar 25-Mar 27-Mar 29-Mar 31-Mar 2-Apr 4-Apr 6-Apr 8-Apr 10-Apr 12-Apr 14-Apr 16-Apr 18-Apr 20-Apr 22-Apr 24-Apr 26-Apr 28-Apr 30-Apr 2-May 4-May 6-May 8-May 10-May 12-May 14-May 16-May 18-May 20-May 22-May 24-May 26-May 28-May 30-May 1-Jun 3-Jun 5-Jun 7-Jun 9-Jun 11-Jun 13-Jun 15-Jun 17-Jun 19-Jun 21-Jun 23-Jun 25-Jun 27-Jun 29-Jun 1-Jul 3-Jul 5-Jul 7-Jul 9-Jul 11-Jul New confirmed cases Sudan COVID-19 Cases & Policy Timeline First confirmed case and all flights suspended Secondary school final exams postponed to July • Private and commercial inter- state travel is banned • Government increases salaries for public sector employees • 3-week lockdown in Khartoum and Omdurman • Government increased the health budget from SDG 51.4 bn to SDG 81.4 bn • Allocated SDG 12 bn in cash transfers to the poorest households over a period of 3 months • Allocated SDG 10 bn for essential commodity production support program “Selaaty” (my commodity) • Government allocates unemployment assistance to workers affected by the pandemic • 3-month tax break to small businesses • All land borders closed except for humanitarian and cargo shipments • All schools and universities closed • Ban on all mass gatherings, including religious celebrations, sports, and restaurants • Curfew from 20:00 to 6:00 • All long-haul bus services suspended Government distributed food baskets to 600,000 households in Khartoum Sorghum exports banned • WHO trained 42 individuals in 14 states (increasing the total number of trained health care workers to 3,00 across the country). • The 5-day training covered COVID-19 surveillance and contact tracing systems, infection prevention and control practices, case management methods, and how to collect samples and arrange shipment to the national laboratory in Khartoum. • Participants were also trained on how to use PPE safely and how best to wash their hands. Phase-out measure: • Curfew reduced to be from 15:00 to 6:00 International donations to Sudan reached USD 1.8 bn Phase-out measure: • Public transportation to resume operations at 30% capacity • International flights started operating out of Khartoum Source: IFPRI
  4. 4. Measuring Economic Impacts 2
  5. 5. Economic Impact Channels • Lockdowns are simulated using a range of impact channels • Shocks to each channel are imposed on the model & impacts are simultaneously traced across all supply chains • Multiplier model separates entire Sudanese economy into 86 sectors • Size of shocks is estimated by IFPRI staff & collaborators (see Annex) Impact channels used to replicate lockdowns 1 Direct restrictions on farming 2 Limiting mining operations 3 Closing non-essential manufacturing operations 4 Disruptions to energy and water supply 5 Limiting construction activities 6 Closing non-essential wholesale/retail trade 7 Transport/travel restrictions 8 Closing hotels, bars and restaurants 9 Closing non-essential business services 10 Government work-from-home orders 11 Closing all schools in the country 12 Disruptions to hospitals and clinics 13 Banning sports & other entertainment 14 Domestic workers & other services 15 Reduced export demand 16 Falling foreign remittances 17 Falling government revenues
  6. 6. Economywide Impact Analysis • Capture effects of domestic lockdowns & global shocks • These have direct impacts on the operation of certain sectors • Plus indirect impacts on other sectors within supply chains • Multiplier analysis captures economywide impacts • Uses input-output data to trace impacts along supply chains & factor/household incomes • Lockdowns simulated for range of possible impact channels • Shocks to channel imposed on model & impacts simultaneously traced across all supply chains Economywide Impacts GDP | Jobs Incomes | Poverty Direct impacts Global Impact Channels (Caused by lockdowns in other countries) Indirect impacts Domestic Impact Channels (Caused by partial or full lockdowns in own country) • Export demand • Remittances • FDI • Agriculture • Mining • Manufacturing • Energy & water • Construction • Trade services • Transportation • Hotels & food services • Banking & finance • Business services • Public admin. & law • Education • Health & social services • Sports & entertainment • Community services Impact Assessment Framework • Sudan model based on 2012 social accounting matrix (SAM) and results are scaled to 2019 GDP and employment levels
  7. 7. Sectors Affected by Lockdown Policies (1) Sector Lockdown restrictions or exemptions in targeted regions Directly Affected? Agriculture • Movement restrictions occurring at start of planting season • Suspended development projects Minimal Mining & crude oil • Continuing to operate (essential sector) • Lower oil prices & export demand (small supply effects to date) Minimal Manufacturing • Food processing & medicines exempted (essential sector) • Nonfood producing companies could be affected due to less labor mobility • Disruption in global supply chain could restrain access to inputs Some Utilities • Electricity & water distribution exempted (essential sector) Minimal Construction Nationwide • Many public works programs reduced in affected areas • Local curfews & border closures reducing activity elsewhere Some Wholesale & retail trade services • Retailers of essential goods exempted (but curfew applied from 20:00pm-6:00am) Some Transportation, storage & cargo Nationwide • Rail & air travel closed; freight transport not affected • Public transportation was affected by the lockdown • Port cargo handling & storage exempted Some Hotels & food services Nationwide • Restaurant dining banned or severely limited • Limited delivery options for food or other products Some
  8. 8. Sectors Affected by Lockdown Policies (2) Sector Lockdown restrictions or exemptions in targeted regions Directly Affected? Banking, finance & insurance • Money transfer services exempted (essential) • Banks operating with essential staff only • Other financial institutions closed or teleworking (e.g., insurance) Minimal Professional & business services • Almost all closed or teleworking (e.g., legal, accounting services) • Activities involving in-person field visits affected (e.g., engineers) Minimal Public admin & government services • All non-essential public sector employees were given paid leave and not teleworking • Public & private security services exempted (essential) Minimal Education services • Nationwide • All public schools closed without much scope for online delivery • Private schools closed with some online materials Minimal Health services • Health services exempted (essential) • hospitals suffered a great shortage of staff Minimal Sports & entertainment Nationwide • Most sports & outdoor entertainment banned • Some activities operating (e.g., newspapers, radio & TV) Some Other services • Domestic workers cannot commute, but live-in workers less affected • In-person religious gatherings banned, only in Khartoum but much less restrictions outside the capital • Major disruptions to informal repair firms due to market closures Some
  9. 9. Global & Other Nationwide Shocks Sector Lockdown restrictions or exemptions in targeted regions Directly Affected? Export demand Nationwide • Decline in demand for oil, but production continues • Reduced international tourism & business travel to Sudan Some Remittances Nationwide • Declines in the value of remittances sent by national working abroad Some Government revenues Nationwide • Fall in tax revenues due to decline in economic activity • Lower trade tax collections due to reduced import demand • the government also gave tax breaks to SMEs Minimal See detailed sector-level assumptions about production & demand shocks in Annex at the end of slide deck
  10. 10. In addition to COVID-19, agricultural sector affected by desert locust crisis Source: Sudan SAM Multiplier Results Sudan’s agricultural production is affected by: • Covid-19 • Few direct impacts on production. • Impact on agriculture mainly indirectly (demand for food, migrant labor shortages). • Swarms of desert locust – plus losses in sorghum production • On top of Covid-19, there is a current threat (started in Jan 2020) of devastating swarms of desert locust that are ravaging crops in the country. • Estimated 20-30% cereal harvest loss and loss in other crops (FAO and estimate based on USDA PSD historical data).
  11. 11. Scenarios 1. Impacts during the full lockdown period • COVID-19 only • Covid-19 plus desert locust crisis 2. Assumed impacts for rest of 2020 as lockdowns are lifted each quarter • We will compare a faster vs. slower easing of restrictions 1 2 lockdown period with gradual easing Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Q1 Q2 Q3 Q4 Further easing and recovery in Q3 Further easing and recovery in Q4
  12. 12. Economic Impacts During the Ongoing Lockdown Period 3
  13. 13. GDP Losses During Lockdown National GDP drops 13.8 – 18.2 % during the lockdown period (under COVID-19 only scenario most economic losses occur in the industry & services sectors) Negative impacts of COVID-19 are exacerbated by locust crisis (strong direct impact on agriculture plus negative spillover effects on industry and services) Source: Sudan SAM Multiplier Results Change in total GDP during lockdown period (%) Change in total GDP during lockdown period (US$ mil.) -18.2 -13.2 -17.9 -22.4 -13.8 -3.7 -15.4 -20.0 -25 -20 -15 -10 -5 0 Combined Covid19 -1243.8 -251.3 -438.9 -553.5 -943.3 -71.6 -377.4 -494.4 Total Agriculture Industry Services Combined Covid
  14. 14. Sources of GDP Losses Restricting trade and transport account for around one third of GDP losses, in the Covid-19 scenario. Contribution of lockdown restrictions & shocks to loss in total GDP during lockdown (sums to 100%) Lower crude oil production as export demand & prices falls Falling remittances reduce household incomes & consumption Source: Sudan SAM Multiplier Results 30.4 15.4 10.3 9.9 9.3 6.4 4.8 4.1 3.9 2.8 1.1 0.7 0.6 0.4 8.4 20.3 13.6 13.0 12.3 8.4 6.3 5.4 5.1 3.7 1.4 0.7 0.7 0.5 0 10 20 30 40 Direct restrictions on farming Closing non-essential wholesale/retail… Transport/travel restrictions Closing non-essential business services Limiting construction activities Closing hotels, bars and restaurants Closing non-essential manufacturing… Falling government revenues Limiting mining operations Banning sports & other entertainment Falling foreign remittances Reduced export demand Disruptions to hospitals and clinics Closing all schools in the country Combined Covid19 Large knock-on effect on goods producing sectors (incl. suppliers of inputs to all sectors)
  15. 15. Impacts on the Agri-Food System Food supply is exempt from most restrictions, but it is still indirectly affected by falling consumer incomes & other shocks Change in agri-food GDP during lockdown period (%) Change in agri-food GDP during lockdown period (US$ mil.) (food services is directly affected by the closing of hotels, restaurants & bars) Source: Sudan SAM Multiplier Results -12.3% -13.2% -7.2% -29.0% -30.2% -5.1% -3.7% -6.4% -4.2% -30.2% Agri-food system Agriculture Agro-processing Food trade and transport Food services Combined Covid19 -375.3 -251.3 -67.1 -40.2 -16.7 -154.0 -71.6 -60.0 -5.8 -16.7 Agri-food system Agriculture Agro-processing Food trade and transport Food services
  16. 16. Unpacking Agricultural GDP Impacts Change in GDP during lockdown (%) Source: Sudan SAM Multiplier Results -13.2% -19.9% -63.0% -18.0% -0.4% -1.5% -3.6% -6.1% -6.3% -5.6% -9.5% -5.3% -3.7% -1.4% -0.7% -4.3% -0.4% -1.3% -2.4% -5.8% -6.0% -5.6% -9.0% -5.3% Agriculture Crops Cereals Pulses & oilseeds Fruits & vegetables Sugarcane Tobacco and Cotton Livestock Meat Dairy &eggs Forestry Fishing Combined Covid19
  17. 17. Impact on temporary job losses Change in Employment during lockdown period (%) Source: Sudan SAM Multiplier Results Reduction in economic activity may have led to a temporary job loss of around 2.7 million jobs. COVID-19 mainly affected service and manufacturing jobs, whereas the locust crisis strongly affects agriculture. -27.5 -23.1 -24.6 -25.6 -2.7 -19.8 -21.9 -13.1 -30.0 -25.0 -20.0 -15.0 -10.0 -5.0 0.0 Agricuture Industry Services Total national Combined Covid19
  18. 18. Impacts on Household Incomes All households experience income losses (14.7 - 19.5% of income) Incomes of rural & lower-income households also fall, especially when taking desert locust crisis into account (under COVID-19 only, urban and nonpoor households are more affected) (mainly due to effects of food system disruptions on farmer incomes & the crop losses Source: Sudan SAM Multiplier Results Change in household incomes during lockdown (%) -19.5% -19.5% -19.5% -18.4% -20.8% -14.7% -14.0% -14.9% -12.1% -17.7% -25% -20% -15% -10% -5% 0% All households Poor Non-poor Rural Urban Hundreds Combined Covid19
  19. 19. 4 Economic Impacts Under Fast & Slow Easing of Restrictions and Recovery
  20. 20. Easing of Restrictions Predicting Sudan’s “post-lockdown” period is challenging Consider two highly stylized scenarios: Faster recovery: Economy rebounds strongly in Q3 & largely returns to normal by Dec 2020 Slower recovery: Modest rebound in Q3 with productivity in Q4 still below pre-lockdown levels Fast Recovery Slow Recovery Global Shocks Q1 Q2 Lockdown period Remittances and export demand decline from late March onwards Q3 Production losses from lockdown period reduced by 90% Production losses from lockdown period reduced by 50% Declines reduced by 50% Q4 Production losses reduced by 99% Production losses reduced by 90% Declines reduced by 75%
  21. 21. GDP Impacts with Recovery Scenarios Source: Sudan SAM Multiplier Results Change in quarterly & annual national GDP with fast or slow easing of restrictions (changes are relative to a no-COVID growth scenario) National GDP is projected to be 4.8 – 9.8% lower in 2020 as a result of COVID-19 and the Desert Locust crisis -0.2% -18.2% -2.6% -0.4% -4.8% -0.2% -18.2% -7.7% -3.0% -7.7% -0.2% -18.2% -9.1% -8.3% -9.8% -20% -18% -16% -14% -12% -10% -8% -6% -4% -2% 0% Q1 Q2 Q3 Q4 2020 Quarterly averages Annual Faster easing & recovery Gradual easing & recovery Gradual easing with slow recovery
  22. 22. A Detailed Assumptions About Production & Demand Shocks
  23. 23. Conclusions and policy recommendations • To follow
  24. 24. Channels, Shocks & Affected Sectors (1) Type of restriction or global shock Major sectors affected2 Size of shock (Combined Scenario) Size of shock (Covid-19 Scenario) Detailed subsectors affected by shock2 Direct restrictions on farming Agriculture (A) See Attachment See Attachment Crop/animal production, hunting, related service activities (D01); forestry, logging (D02); fishing, aquaculture (D03) Limiting mining operations Mining, quarrying (B) Coal, lignite (D5); crude petroleum, natural gas (D06); metal ores (D07); quarrying (D08); mining support service activities (D09) Closing non-essential manufacturing operations Manufacturing (C) -15-20% -15-20% Food products (D10); coke, refined petroleum (D19); pharmaceuticals, medicinal chemicals (D21); electromedical equipment (G266) Beverages, tobacco (D11-12); textiles, clothing, leather (D13-15); wood, paper, printing (D16-18); chemicals, rubber, plastics (D20-21); non-metallic minerals (D23); metals (D24- 25); equipment, machinery (D26-28 excl. G266); vehicles, transport equipment (D29-30); furniture (D31), other manufactures (D33) Disruptions to energy and water supply Electricity, gas (D); water supply (E) Electricity, gas, steam supply (D35); water collection, treatment, supply (D36); sewerage, waste collection/remediation (D37-39) Limiting construction activities Construction (F) -15% -15% Construction of buildings (D41); civil engineering (D42); specialized construction activities (D43) Closing non-essential trading activities Wholesale/retail trade (G) -25% -25% Agricultural raw materials, live animals (G462); agricultural machinery, equipment, supplies (C4653); food, beverages, tobacco, incl. stalls & markets (G463 G471-472 C4781); construction materials, hardware, plumbing, heating equipment (C4663); automotive fuels (G473) Motor vehicle trade/repair (D45); wholesale trade (D46 excl. G462-463 C4653 C4663); retail trade (D47 excl. G471-472 G47 C4781) Transport/travel restrictions Transportation, storage (H) -25% -25% Postal/courier activities (D53); transport via pipeline (G493) Sea/coastal/inland water transport (C5011-5012 C5022); transport support (G522) Freight rail/road/air transport (C4912 C4923 G512); warehousing/storage (G521) Urban/suburban passenger/other land transport (C4911 C4921-4922) Passenger air transport (G511) Government work-from- home orders Public administration, defense (O) Public administration, defense, compulsory social security (D84) Closing hotels, bars and restaurants Accommodation, food services (I) -30% -30% Accommodation (D55); food/beverage service activities (D56)
  25. 25. Channels, Shocks & Affected Sectors (2) Type of restriction or global shock Major sectors affected2 Size of shock (Combined Scenario) Size of shock (Covid-19 Scenario) Detailed subsectors affected by shock2 Closing non-essential business services Information, communication (J); finance, insurance (K); real estate (L); professional/ scientific/technica l activities (M); administrative/ support services (N) -10-15% -10-15% Publishing activities (D58); programming/broadcasting activities (D60); telecommunications (D61); computer programming/consultancy activities (D62); information service activities (D63); financial services, insurance, pension funding, auxiliary services (D64-66); real estate activities (D68); security and investigation activities (D80) Accounting, bookkeeping, auditing, tax consultancy (G692); head offices, management consultancy (D70); scientific research/development (D72); advertising, market research (D73); other professional/scientific/technical activities (D74); Legal activities (G692); architectural/engineering activities (D71); veterinary activities (D75) Motion picture/video/television program production, etc. (D59); renting/leasing activities (D77); employment activities (D78); travel agencies, tour operators (D79); building services, landscape activities (D81); office administrative, office support, other business support activities (D82) Closing schools Education (P) Pre-primary and primary education (G851) Secondary education (G852); Other education (G854) Higher education (G853); Educational support activities (G855) Disruptions to hospitals and clinics Human health, social work (Q) -10% -10% Human health activities (D86); residential care activities (D87); social work activities without accommodation (D88) Banning sports & other entertainment Arts, recreation, entertainment (R) -20% -20% Creative/arts/entertainment activities (D90); libraries, archives, museums, other cultural activities (D91); gambling, betting activities (D92); sports, amusement/recreation activities (D93) Domestic workers & other services Other service activities (S); households as employers (T); extraterritorial organizations (U) Extraterritorial organizations/bodies (D99) Membership organizations (D94) Other personal services (D96); domestic workers/personnel (D97); Other production activities of private households for own use (D98) Repairing computers & personal/household goods (D95)
  26. 26. References Arab Reform Initiative. (2020, May). Sudan: Managing COVID-19 Pandemic During a Time of Transition. Retrieved from Sudan: https://www.arab- reform.net/publication/sudan-managing-covid-19-pandemic-during-a-time-of-transition/ FAO. (2020). Desert Locust Crisis: Appeal for Rapid Response and Anticipatory Action in the Greater Horn of Africa. Rome: ReliefWeb. Retrieved from https://reliefweb.int/sites/reliefweb.int/files/resources/Desert%20Locust%20Crisis%20- %20Appeal%20for%20rapid%20response%20and%20anticipatory%20action%20in%20the%20Greater%20Horn%20of%20Africa%20January%20- %20December%202020%20.pdf FAO. (2020). Desert Locust Situation Update. Rome: Locust Watch. Retrieved from http://www.fao.org/ag/locusts/en/info/info/index.html FEWS. (2020, June 1). East Africa: Sudan. Retrieved from Large Populations Require Assistance Amid Very High Staple Food Prices and COVID-19 Restrictions: https://fews.net/east-africa/sudan GARDAWorld. (2020, July). Security Alerts. Retrieved from Sudan: https://www.garda.com/crisis24/news- alerts?search_api_fulltext=&na_countries%5B%5D=1781&field_news_alert_categories=All&field_news_alert_crit=All&items_per_page=20 IFAD. (2020, April 2). Making Sure Rural Communities Won't be Left Behind in the Response to COVID-19. Retrieved from Regional Trends: https://www.ifad.org/en/web/latest/news-detail/asset/41851548 IFPRI. (2020, April-June). Expert Opinion and Key Informant Interview. Cairo: Participants: FAO, UNDP, WFP and ICARDA. IMF. (2020, July 15). Policy Responses to Covid-19. Retrieved from IMF Policy Tracker: https://www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19#E KPMG. (2020, April 29). Government and Institution Measures in Response to COVID-19. Retrieved from Sudan: https://home.kpmg/xx/en/home/insights/2020/04/sudan- government-and-institution-measures-in-response-to-covid.html RSTMH. (2020, May 26). COVID-19 Response in Sudan. Retrieved from The Royal Society of Tropical Medicine and Hygiene: https://rstmh.org/news-blog/news/covid-19- response-in-sudan Siddig, K., Elagra, S., Grethe, H., & and Mubarak, A. (2018). A Post-separation Social Accounting Matrix for the Sudan. MENA RP Working Paper 8. Retrieved from https://www.ifpri.org/publication/2012-social-accounting-matrix-sam-sudan The Republic of the Sudan. (2020, July 8). The Council of Ministers. Retrieved from Cabinet Decrees Gradual Back to Work: http://www.sudan.gov.sd/index.php/en/home/news_details/2253 UNDP. (2020, May 26). COVID-19 Socio-Economic Impact Assessment for Sudan. Crisis Response. Retrieved from https://www.arabstates.undp.org/content/rbas/en/home/library/crisis-response0/covid-19-socio-economic-impact-assessment-for-sudan.html UNOCHA. (2020, March 18). ReliefWeb. Retrieved from Sudan: Corona Virus - COVID-19 Country Preparedness and Response Plan CPRP - April 2020: https://reliefweb.int/report/sudan/sudan-corona-virus-covid-19-country-preparedness-and-response-plan-cprp-april-2020 UNOCHA. (2020, March 31). ReliefWeb. Retrieved from East Africa: Ethiopia, Somalia, South Sudan, Sudan, and Uganda - Regional Supply and Market Outlook: https://reliefweb.int/report/sudan/east-africa-ethiopia-somalia-south-sudan-sudan-and-uganda-regional-supply-and-market UNOCHA. (2020, March 31). ReliefWeb: Sudan Price Bulletin. Retrieved from Covid-19: https://reliefweb.int/report/sudan/sudan-price-bulletin-march-2020 UNOCHA. (2020). Sudan Key Message Update: Sudan Imposes Transportation Limits Amid COVID-19 Outbreak and Large Food Security Crisis. Rome: ReliefWeb. Retrieved from https://reliefweb.int/report/sudan/sudan-key-message-update-sudan-imposes-transportation-limits-amid-covid-19-outbreak-and UNOCHA. (2020). Sudan Situation Report. Rome: ReliefWeb. Retrieved from https://reliefweb.int/report/sudan/sudan-situation-report-2-apr-2020-enar UNOCHA. (2020, February 5). Sudan: Desert Locust Might Constitute a Natural Disaster. Retrieved from ReliefWeb: https://reliefweb.int/report/sudan/sudan-desert-locust- might-constitute-natural-disaster USDA. (2020, July). Foreign Agriculture Service (FAS). Retrieved from Production, Supply, and Distribution Database. Ag Data Commons: https://data.nal.usda.gov/dataset/production-supply-and-distribution-database

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