Economists advise region to procure large order of virus vaccines
Port Of Spain – Two regional economists have advised Caribbean countries to join forces to buy about 20 million coronavirus (COVID-19) vaccine doses for the entire region, or the pandemic will continue to devastate lives and economies for another two years.
Dr Justin Ram, former director of economics at the Caribbean Development Bank, and Kiran Mathur Mohammed, co-founder of medl, an IDB lab-backed social impact health tech company, contended that this is the only way out of the current cycle of lockdowns and fear.
“To save lives and prevent hospitals from being overwhelmed, Caribbean countries have imposed lockdowns, border closures, restricted movements and quarantines for almost a year. These, alongside our own physical distancing we have adopted ourselves – necessary to protect against the virus – have resulted in job losses, school closures, and triggered domestic violence, abuse and mental health crises.
“We must escape from this constant, crippling cycle of lockdowns and fear, and get people back to work so we can start adjusting to our new post-covid19 lives. The vaccine is the only way,” the economists wrote in a joint article.
Ram and Mohammed noted that while it is good that governments have accessed vaccines through the World Health Organisation (WHO)-led COVAX Facility, and individual countries have started bilateral discussions with vaccine providers already approved by the WHO, getting those doses will take far too long.
“By the time a vaccine is WHO-approved, its manufacturers are immediately flooded with orders. Distributors in Mexico have said that AstraZeneca, for example, has said that nothing will be available to them until mid-2022. There is huge competition to obtain vaccines and the simple market reality is that smaller players have less clout,” they said.
“Counterintuitively, it is actually easier to procure a larger order than a smaller one. We will only land vaccines and achieve herd immunity in the next few months if CARICOM pre-orders vaccines now from candidates whose WHO approval is expected in the next month or two. Large numbers of other countries are already taking this approach. We must do so or we will end up living like this until 2023.”
Ram and Mohammed suggested that regional countries, with a total annual GDP of about US$91.5 billion, could afford to do this.
They estimated that with 18.5 million people in the Caribbean Community (CARICOM), in order to achieve herd immunity, enough vaccines must be purchased for 90 per cent of the population, plus spillage and usage, as well as some to be held for future use.
“If we assume that COVAX will provide enough vaccines for 20 per cent of our population in 2021, and that we need to vaccinate 90 per cent of our population, that means 13 million people still need to be vaccinated. Multiplied by 150 per cent, that makes 19.4 million vaccines.
“With vaccines ranging between US$4 and US$37 per dose and with most vaccines requiring two doses, if we take the median price of US$21 per dose multiplied by two doses and we add 30 per cent for transport, storage, and the cost of procurement, the total cost to inoculate one person is about US$55. US$55 multiplied by 19.4 million people is just over US$1 billion, or 1.2 per cent of total Caribbean GDP,” they noted.
The economists noted that while allocating the cost for each country based on population size might seem the fairest approach, that would leave CARICOM’s poorest nation, Haiti, with the largest bill of about US$652 million, since it has the biggest population.
A better allocation formula to spread the burden, they suggested, would be by share of GDP.
“Traditionally the Caribbean has supported multilateralism and fairness, principles that Caribbean citizens should all be proud of. TT’s bill under this would be US$251 million, just 3.4 per cent of its national budget. Jamaica’s would be less – US$182 million– while Barbados and Guyana would pay US$64 million each.
“This is a vast return, considering COVID-19 cost TT alone a conservative US$1.3 billion last year alone. To finance this, CARICOM countries can collectively raise a bond for US$1 billion and split the repayments bond between countries, based on their share of GDP. Bond repayments can also be funded by, for example, an increase in common external tariff (CET) rates on certain products, incentivising local industries.”
According to the economists, the region’s most important competitive asset is human capital and “our people’s welfare must come before every other priority”.
“CARICOM must come together and act now,” they said. (CMC)