Investor Alert

Sept. 29, 2022, 8:24 a.m. EDT

Nearly 40% of COVID recovery funds in developing nations went to big companies, not the poorest people: report

Watchlist Relevance

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Natural Gas Continuous Contract (NG00)

or Cancel Already have a watchlist? Log In

By Rachel Koning Beals

More than a third of COVID-19 recovery funds in 21 developing countries were scooped up by big corporations — not all of which were likely to pass along that relief directly to the workers for whom it was intended.

Those are the findings in a report released Wednesday by the Financial Transparency Coalition, a global network of groups focused on fighting illicit flows of money. The group argues that major companies collected the benefits, including loans and tax cuts, seemingly crowding out programs offering social protection, smaller businesses in need of relief, and “informal workers.” 

Worldwide, there are approximately 2 billion informal workers — individuals with casual work arrangements or no fixed salary, typically forgoing the structural security such as health benefits or paid days off.  Workers take these positions out of necessity, and industries can exploit their willingness.

The coalition’s report also found that one-third less money was spent in pandemic relief last year compared to 2020, down to 2.4% of a country’s GDP on average, due to the worsening global economic situation . And this pullback took place even as the lingering monetary and health costs brought on by the pandemic persisted, the report authors argued.

The group’s mission in large part is to force global decision makers to rethink the impact of so-called austerity measures, or the sharp budget reductions or pullbacks in borrowing intended to improve a country’s finances and usually appease its lenders and investors, but often at the expense of programs for people.

The pandemic-relief imbalances take place as more than  85% of the world’s population  will live in the grip of stringent austerity measures by next year, the Financial Transparency Coalition said.

In total,  between 75 million and 95 million people are expected to be pushed into extreme poverty this year  alone. That’s due to the lingering disruptions of the COVID-19 pandemic and the cost-of-living crisis hitting developed and developing nations, spurred by Russia’s war on Ukraine. Russia’s invasion has disrupted energy markets /zigman2/quotes/210189548/delayed NG00 -0.39% , driving up costs to heat and cool homes or travel to work, while food in particular is seeing an inflationary surge due to supply-chain issues and drought.

Women are the hardest hit

What’s more, by the coalition’s assessment, these latest developments hit amid rising and potentially long-lasting embedded inequality between the rich and the poor, with women in particular shouldering the burden of lost access to economic opportunities, in some cases erasing decades of slow progress for wage-driven freedoms.

Read: U.S. and WHO commit to new fund for pandemic prevention and preparedness and urge world leaders to back it

Collectively, the money that women across the globe missed out on in 2020, when the pandemic impacted the most people at once, is more than the combined value of the economies in 98 countries, according to a separate report issued in 2021 by the global charity Oxfam. The impact was most commonly due to pandemic-related job losses and child-care obligations, which women disproportionately took on compared to men.

Oxfam said women worldwide missed out on at least $800 billion in income last year, as MarketWatch previously reported .

In Lebanon, for example, where the local currency has lost more than 90% of its value, food prices have risen more than elevenfold, over 80% of the population has fallen below the poverty line, and women are struggling to pay for costly sexual and reproductive healthcare. The price of birth-control pills in Lebanon, for instance, has surged by more than 600% since 2019, as Thomson Reuters reports .

Read: ‘Having $0 in savings means having absolutely no safety net’: Survivors of gender-based violence don’t have enough money to pay for a parking ticket

To be sure, allegations of the misuse of public funds, especially around COVID relief — or, in some cases, funds redirected from their intended use — have plagued recovery efforts in the developed world too.

In the U.S. alone, a close examination of the distribution of public funds for private use is underway in Mississippi, which is perennially one of the poorest U.S. states and where residents of its largest city, Jackson, recently went almost two months without safe drinking water. The welfare scandal is the largest-ever public corruption case and has ensnared several people, including National Football League Hall of Famer Brett Favre and a pro wrestler whose drug rehab was allegedly funded with public money. (Favre has not been charged with a crime and has denied wrongdoing.)

US : U.S.: Nymex
$ 2.56
-0.01 -0.39%
Volume: 2,029
Dec. 6, 2023 9:42p
1 2
This Story has 0 Comments
Be the first to comment
More News In
Economy & Politics

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.