Drivers of Disparity: How Policy Responses to COVID-19 Can Increase Inequalities

The document examines the distributional effects of COVID-19 macroeconomic policies in Nigeria and Uganda, finding that 'neutral' policy designs often exacerbate existing inequalities. It highlights the exclusion of the urban poor, women, and the informal sector from cash transfers and financial relief, while noting that monetary policy easing has not translated into lower lending rates for high-risk borrowers. The brief recommends leveraging electronic platforms for cash distribution, increasing investment in renewable energy for low-income households, and improving long-term tax capacity to fund social protection.

• Cash transfer programmes in Nigeria and Uganda suffer from inadequate scale and poor targeting, largely excluding the urban poor and the 'newly poor' who are susceptible to pandemic-induced income shocks. In Nigeria, approximately 81% of poor people are excluded from the National Social Register, while in Uganda, only 1.5 million people benefited from the Urban Cash for Work Programme despite 10 million people living in poverty.
• Macroeconomic relief measures such as tax relief, debt moratoriums, and loan restructuring primarily benefit the formal sector, disproportionately excluding women and agricultural workers who dominate the informal economy. The informal sector accounts for 80% of the labour force in both Nigeria and Uganda, yet these workers face higher poverty risks and less access to relief.
• Reductions in central bank policy rates in Nigeria (from 13.5% to 11.5%) and Uganda (from 9% to 7%) have not resulted in lower commercial lending rates. This failure particularly impacts high-risk and low-income borrowers, including youth, women, SME owners, and small-scale farmers who lack collateral.
• In Nigeria, exchange rate adjustments and the devaluation of the naira have increased the cost of imports, which negatively impacts the manufacturing sector and reduces the purchasing power of poor citizens through rising domestic inflation.
• The removal of fuel and electricity subsidies in Nigeria primarily reduces the disposable income of the middle class and wealthy, as poor households often lack access to electricity or use less fuel.
• Budget restructuring in both countries has failed to adequately support the poor. In Uganda, supplementary budget funds primarily benefited SMEs via the Uganda Development Bank and government suppliers. In Nigeria, 2020 budget allocations for health, education, and humanitarian affairs were reduced relative to 2019.

APA

Ekeruche, M. A. (n.d.). Drivers of Disparity: How Policy Responses to COVID-19 Can Increase Inequalities. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2020/12/Policy-Briefing-01-ekeruche.pdf

Chicago

Ekeruche, Mma Amara. Drivers of Disparity: How Policy Responses to COVID-19 Can Increase Inequalities. South African Institute of International Affairs, n.d. https://saiia.org.za/wp-content/uploads/2020/12/Policy-Briefing-01-ekeruche.pdf.

Wikipedia

{{cite report |last1=Ekeruche |first1=Mma Amara |title=Drivers of Disparity: How Policy Responses to COVID-19 Can Increase Inequalities |publisher=South African Institute of International Affairs |url=https://saiia.org.za/wp-content/uploads/2020/12/Policy-Briefing-01-ekeruche.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ekeruchenddrivers, author = {Ekeruche, Mma Amara}, title = {{Drivers of Disparity: How Policy Responses to COVID-19 Can Increase Inequalities}}, institution = {South African Institute of International Affairs}, url = {https://saiia.org.za/wp-content/uploads/2020/12/Policy-Briefing-01-ekeruche.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }