Myat Thet Thitsar and Markus Kostner argue that heeding lessons from Cyclone Nargis can help Myanmar to overcome the impact of the pandemic response.
The second of May 2020 was the twelfth anniversary of Cyclone Nargis, a category 4 tropical storm that hit the Ayeyarwady Delta of Myanmar. With the loss of over 140,000 lives, the temporary displacement of up to 800,000 people, and estimated damages and losses of US$ 4 billion, Nargis was the most devastating natural disaster in Myanmar’s recorded history.[1]
Myanmar is now facing yet another major disaster, the coronavirus disease 2019 (COVID-19). By June 24, around 9.3 million people have tested positive for the virus globally, and over 478,000 have died. That same day, the reported number of COVID-19 infections in Myanmar still stood at only 293, with 6 deaths. The government’s containment policy may succeed in keeping the direct effects of the coronavirus in Myanmar limited. However, its indirect, socioeconomic impacts for the country as a whole may end up being as dramatic as those of Nargis were for the Delta.
In this article, we first look into the impacts of Cyclone Nargis on affected villages and their path to economic and social recovery. We then discuss the early impacts of COVID-19 on select economic sectors and in some of the Nargis-affected areas. Next, we briefly review the government’s emergency aid measures and reflect on their usefulness in light of lessons learned from post-Nargis aid. Finally, we argue in favour of a holistic policy to make rural communities more resilient to future crises.
In the aftermath of Cyclone Nargis, in 2008, Enlightened Myanmar Research Foundation (EMReF) embarked on a longitudinal analysis of the storm’s social and economic impacts in a panel of 40 villages in the eight most affected townships in the Ayeyarwady Delta.[2] This Post-Nargis Social Impacts Monitoring (SIM) provided unique insights into how households and communities recover after a major shock. We highlight here some of the salient findings of the SIM series.
SIM helped us to understand the non-linear character of recovery and how much the long-term recovery of Delta villages was determined by cumulative effects, as well as other external factors, notably those linked to climate change. By way of example, the farming sector had shown signs of a recovery two years after Nargis, but was in decline again three years later as a result of various environmental factors. The soil of the Delta— which used to be so fertile that paddy yields were reasonably high even when seeds were scattered by hand and without the use of fertilizer or other inputs— was impacted severely by the saline water intrusion caused by Nargis’ storm surge. As a result, farmers had to start scattering seeds two to three times per season, something many small farmers could not afford over time. As a result, many eventually joined the ranks of casual and migrant workers or subsistence fishers.
Nargis also damaged the embankments and streams in its path, which are both central to the ecology of farming villages. With little aid available for repairs, farmlands became more prone to flooding— which occurred as a result of more irregular rains, in terms of both timing and intensity— and to salinity and pest infestations, which in turn reduced yields and income. These factors ultimately impacted farmers’ ability to repay their debts.[3] These debts have been mounting since the time of Nargis, as the cyclone disrupted the debt-harvest-repayment cycle that has been a central feature of farming in the Delta for generations.
The other main livelihood in the Delta, fishing, has also declined substantially since Nargis because of a significant decline in fish stocks. The purported reasons for this decline according to villagers were overfishing, the use of damaging fishing methods, and ecological changes, including the destruction of mangroves before and during the cyclone. In fact, aid contributed to overfishing as many labourers received fishing gear after Nargis and turned to subsistence fishing.
By the middle of 2017, nearly two-thirds of SIM villages were considered to have recovered compared to their comparatively low pre-cyclone level of economic activity.[4] Two factors were of paramount importance for this recovery: first, migration, and second, more affordable credit.
In the years after Nargis, Delta villagers have relied on migration as a core coping strategy, a life-saving safety valve in particular for casual labourers who were doing poorly in two-thirds of the study villages.[5] With the noticeable uptick in economic activity in Yangon from about 2013 onwards, migration became a dominant economic strategy for all livelihood groups, mirroring the surge in migration across the country. For instance, according to a 2016 survey by the World Bank and Livelihoods and Food Security Trust Fund, 20 percent of households in the Ayeyarwady Delta had at least one household member migrating.[6] The dramatic increase in informal settlements in Yangon’s Hlaing Tharyar township in 2013 and 2014 was the result of migration from the Delta area. A survey of the garment sector in Yangon, conducted in 2017, found that Ayeyarwady Region accounted for 29 percent of the workforce in garment factories in Yangon.
The results from SIM reflected this pattern: in over three-quarters of the study villages, there were at least 10 percent of households with a permanent migrant member.[7] For labourers, this meant that they became less dependent on the two predominant livelihood categories of farming and fishing, and that those who did not migrate enjoyed markedly higher wages (which eventually led many farmers to turn to mechanisation).[8]/p>
Moreover, since 2013, the increasing availability of more affordable loans due to expanding government lending and a growing number of microfinance aid schemes have supported the Delta’s recovery.[9] More affordable loans did not, however, diminish the role of private moneylenders who have remained a major source of lending for all occupational groups.[10] Neither did it lessen the practice of taking out multiple loans from different sources. Oftentimes, villagers borrow from private moneylenders in order to stay current on their cheaper microfinance loans so that they remain eligible for new microfinance loans in the future. A decade after Cyclone Nargis, for example, casual labourers in the SIM study villages could access up to six different types of lenders. The number of villages in a debt trap decreased since 2013. And yet, the majority of villagers in one-fifth of villages was still unable to either repay principal or pay interest. Debt has thus remained a systemic constraint to poverty reduction in the Delta.
Almost ten years after Nargis, although a majority of villages were considered to have recovered from the cyclone, only 15 percent of the SIM study villages were considered “resilient” to upcoming disasters, and another quarter “somewhat resilient.”[11] In other words, despite post-Nargis aid efforts and years of outmigration, over one-half of the villages lack the ability to face a new disaster.
The SIM series identified migration with attendant remittances, local job opportunities and more affordable loans as key factors for villagers’ resilience, i.e., their capacity to recover. Equally important at the household level were the availability of economic assets after the disaster, an entrepreneurial spirit, good management of household resources, and the number and health of working family members. At the community level, leadership and social networks were additional critical factors.[12] These factors are again at play when it comes to recovery from the economic and social impacts of COVID-19. In this paper, we take a closer look at some of them. We recognize that at this stage, our data is limited in geographic scope and cover only the initial few months of the coronavirus pandemic in Myanmar. Nonetheless, the insights that we have gained so far help to discern emerging patterns and identify possible policy actions that, based on EMReF’s extensive field research across the country, appear to be valuable for rural Myanmar as a whole.
Most of the migrants from the Delta have been working in Yangon and also Pathein in factories (especially textiles), at construction sites, and in markets and restaurants. We, therefore, briefly touch upon these sectors.
The manufacturing and tourism sectors, which account for 7 and 5 percent of the country’s workforce, respectively, have been hit hard since the beginning of the coronavirus outbreak. By the end of April, over 170 factories had already shut down as a result of cancelled orders, resulting in the loss of over 60,000 jobs. In addition, by the end of May, at least 71,000 migrants have returned from Thailand and China.[13]
According to a recent study by The Asia Foundation, almost two-thirds of businesses manufacturing textiles and over one-quarter of businesses engaged in food and beverage service activities reported that sales had ceased completely by early May as a result of the coronavirus.[14] Over all industries, over 22 percent and 19 percent of businesses in the city of Yangon and in the Delta[15], respectively, reported the same.
Eighty percent of textile businesses, almost 60 percent of food and beverage businesses and over 60 percent and 37 percent of businesses in Yangon and the Delta, respectively, indicated that their risk of survival was moderate or high.[16] One in six employees in food and beverage service businesses has been laid off, though only one in twelve so far in textile manufacturing. Over all industries, businesses had laid off 16 percent of employees by early May as a result of COVID-19, and almost 20 percent of manual rank-and-file employees[17], the category to which most migrants from the Delta belong.
Businesses are also worried about their debt. The share of higher-interest loans from microfinance institutions has doubled to 51 percent through the early stages of the COVID-19 crisis.[19]
As if these early effects were not been devastating enough, the government expects the most severe economic impact from the coronavirus to unfold from September 2020 onwards.
Around the time of the twelfth anniversary of Cyclone Nargis, EMReF researchers undertook phone interviews in six villages across three townships in Ayeyarwady Region. These villages had been part of the panel of 40 SIM villages. The researchers spoke to village heads, village elderly and respected persons, and women about their everyday lives and livelihoods in the time of COVID-19.
One critical issue came through time and again: COVID-19 has put an abrupt end to improving living standards among casual labourers and migrant workers. They had gained the most from the rapid economic growth over the past several years and yet, have felt the early brunt of the economic impact of COVID-19 the most. They may suffer more than other occupational groups in the long run as well. We present our preliminary findings against key factors of resilience identified by SIM.
Migration and remittances. Migrant workers commonly return to celebrate Thingyan with their families; factories usually close during the water festival. This year, however, many workers had to return early in March as several factories had closed; for the same reason, many are still staying in the villages. Those who remained in Yangon were able to work when factories reopened after Thingyan – but only for a few days, as many factories then closed as well due to the disease. Yet, other migrants have not left their village to return to their workplace as they are concerned that they might get stuck in Yangon, far away from their families if the situation worsens. By contrast, international migrants from the study villages have not yet returned home.
Respondents presented an imprecise picture of remittances. While many reported that remittances had already declined, others indicated that a clearer picture would only emerge when workers normally get paid, which was after the time of the interviews. There were further complicating factors. Migrant workers used to be able to save more as many received in-kind support like food from their employers. With businesses closed, such additional support has also ceased. Moreover, any money migrants used to save was now being spent by themselves in the villages, leaving less for the family. In some extreme cases, families in the villages now sent money to the migrants who remained in Yangon but did not have a job.
Local job opportunities. The three main livelihood categories in the villages have so far been affected differently by the coronavirus. Farmers reported no obvious impact by late April. The most recent harvest ended in mid-April, and there were no problems selling the produce. At the same time, all six villages experienced a decline in yield because of irregular rains and saltwater intrusion.
Fishing has seen a noticeable impact due to the coronavirus. Village heads were exercising some flexibility in allowing fishers to fish close to the village during night time, as they normally do, despite a curfew from 10.00 pm to 4.00 am. However, on the one hand, fishers were not able to venture beyond nearby creeks lest they needed to go into quarantine when they returned home. In this way, fishers who usually fish farther away from the village have seen a more drastic reduction in their incomes. On the other hand, fish collectors in the villages have closed as the fish collectors in the towns to whom they normally sell the catch had closed; travel restrictions were an added hindrance. This has led to a significant decline in prices. Fishing lobsters and crabs, usually a fairly lucrative side income, was also no longer profitable as, in order to save money, people locally did not want to buy them, and markets farther afield (Yangon in particular, but also abroad) could not be reached.
Casual labourers were the hardest-hit livelihood group. After Thingyan is usually the low agricultural season and labourers leave their villages to find work elsewhere, such as in another township or Yangon. This seasonal migration is a core element of the Delta’s economic calendar, and improvements in the road infrastructure after Nargis facilitated this movement. However, because of travel restrictions, labourers were now no longer able to pursue this casual labour.[20] Those who did venture out and braved quarantine found construction sites, restaurants and rice mills mostly closed. Highly skilled labourers (e.g., in carpentry or masonry) did manage to find work in their villages as better-off families were repairing their homes in advance of the upcoming monsoon season; there cannot be more than five workers on a site, however, further limiting these opportunities. Consequently, labourers were already struggling for subsistence.
More affordable loans. It was becoming evident that the local economy’s reliance on credit may be an Achilles heel for post-COVID recovery. Villagers in all study villages, and in particular farmers and casual labourers, have found it difficult to repay principal and pay interest. Respondents across the villages estimated that at least one-half of villagers were facing this problem. In the past, farmers have often relied on more expensive bridging loans to repay cheaper government and microfinance loans. With crop yields and prices declining this year, many farmers found themselves in the same predicament. Bridging loans were, however, starting to dry up.
Farm labourers were facing even more dire constrains. In past times of need, they could rely on farmers to give them advance wages for future work on their farms. Nowadays, however, many farmers were uncertain when they can fully resume farming – though some anticipated that the agricultural calendar would continue as normal. Consequently, many farmers who still provided advance wages to laborers have reduced the amounts.
There were few other credit sources available for laborers or others now. Villagers in all study villages tried to borrow after the pandemic hit Myanmar, but encountered difficulty accessing new loans. Many pawnshops had closed and those that still operated required collateral in gold; even then, the amounts were lower than before. Several microfinance institutions are operating in the villages. Respondents noted that some have extended the repayment period by 28 days at least in some instances but were not otherwise seen as helping to ease the socioeconomic impact of the virus on their clients. Respondents in one village indicated that one provider stopped giving new loans, including to those who had repaid previous loans. Compounding this predicament in all villages was the fact that remittances had generally been used to repay loans; with remittances waning, villagers’ ability to settle their debts was being increasingly compromised. Their outlook became bleak, laden with fear, and fraught with uncertainty.
Social relations. Social relations were considered the same in half the villages and worse in the other half, compared to before the coronavirus. In two of the latter group villagers felt colder toward each other because of physical distancing. Given the settlement and housing patterns in Delta villages, it was often impossible to keep a distance, and social bonds tended to make it more difficult for people to not visit family members or neighbours. To establish a physical boundary, many villagers have placed cords at their front gates in order to deter unwanted visitors.
Respondents reported that no social or religious events have taken place since early April; villagers know that local authorities would arrest and fine them if they held these events. There were several cases in all villages where villagers have cancelled weddings and religious ceremonies even when they lost the money they had already spent to prepare for the event.
In one village, tensions arose between villagers on the strictness of mobility restrictions and acceptance of migrants coming back from Yangon. Families in the middle section of the village who were receiving returning migrant members did not support these restrictions. The tensions and arguments eased only when the number of returnees dropped after the Thingyan holiday.
There are several lessons from the post-Nargis aid effort that are worth remembering.[21] For example, SIM research found that while tremendously helpful to beneficiaries, aid was not always targeted to the needs of the disaster-affected populations, did not consider cumulative impacts as they evolved over time, and did not focus on critical actors in the value chain who were not considered poor, but were equally affected by the cyclone. SIM also pointed out that communities were not very involved in making decisions about aid, leading to a disconnect between aid and needs, and that the ad hoc committees that aid providers set up tended to affect relations between villagers and their leaders negatively, sometimes far beyond the period of aid delivery. We briefly analyse the current aid effort against these findings.
The government issued its “COVID-19 Economic Relief Plan” (CERP) at the end of April. From the perspective of rural households, the plan contains some important measures, including cash or lending support to smallholder farmers, the implementation of rural cash-for-work programs, the extension of labour benefits, unconditional cash transfers to the most vulnerable and affected households, and negotiations with private financial institutions to give more flexibility related to interest and mortgage payments for households most negatively affected by the pandemic.
These activities could go a long way in compensating the rural population temporarily for income losses due to COVID-19. Indeed, based on SIM analysis, they can boost their capacity to cope with the crisis. For instance, as both the post-Nargis aid effort and global practice with aid in emergency situations have shown, cash transfers generally help affected people the most.[22]
Emerging evidence about the coronavirus impact from Delta villages does pose some questions, however. For instance, occupational groups other than farmers— like fishers, small business owners, herders or weavers— are not directly covered by CERP. Their ability to make a living as a result of COVID-19 may be even more compromised than that of farmers.
Moreover, while more affordable lending has been a central element of post-Nargis recovery, many debt-ridden farmers and other villagers still rely on informal moneylenders. They also have to contend with the more recent practice by microfinance institutions of lending to those who have no regular income – contrary to their own lending policies.[23] Neither informal credit, nor emergency borrowing, nor the lending practices of microfinance institutions are addressed in the CERP; they merit urgent policy attention nonetheless.
In addition, the extension of labour benefits raises concerns. Healthcare benefits for unemployed Social Security Board members are an important measure. However, the Social Security Board covers only 2.5 percent of the population. Furthermore, according to the Annual Labour Force Survey-2017, 83 percent of the country’s workforce of 22 million are in the informal sector. By focusing on the formal sector, the CERP excludes the majority of workers who find themselves unemployed because of the consequences of COVID-19. This forces people to borrow for consumption, which is both worrying and unsustainable.[24]
The challenges of providing emergency aid are already becoming apparent as well. As an immediate measure under the CERP, the government provided one-time food aid (including rice, cooking oil, salt, and beans) to poor households across the country during the month of April. Our phone interviews with Delta villagers indicate that, in several villages, the aid that was provided was insufficient; it did not cover all poor households in a given location. This required village leaders to improvise without guidance and raise resources from better-off families in order to make up for the shortfall. While this attests to the capability of local leaders, a critical factor for recovery and resilience,[25] it puts even more strain on people and places that already feel the COVID pinch.
These lessons underline the importance of including communities as agents in the COVID-19 response, and not simply as passive recipients of aid. It is communities that know best which households and groups are most vulnerable and affected, and it is communities that know best which aid measures and local infrastructure projects will help them to recover. CERP implementation would benefit from empowering communities in order to take advantage of this knowledge. Initiatives like the government’s National Community Driven Development Project attest to communities’ ability to manage their own development transparently and effectively.
COVID-19 will inevitably lead to a drastic drop in remittances at least during 2020, force people to sell assets from land to gold, make many people go hungry, and push many households (back) into poverty. In this way, the coronavirus has exposed the country’s overreliance on migration as an economic Achilles heel. This presents a serious policy challenge to the government that cannot be resolved with emergency measures alone.
COVID-19 is likely to alter the economic landscape in rural Myanmar, and the pattern and extent of migration. Consequently, it is important for the government to develop a comprehensive, strategic plan for revitalizing rural livelihoods – beyond farming, and beyond relying on migration. Diversifying the rural economy could provide persuasive incentives for the many young people to remain in, or return to rural areas. Bringing to bear their entrepreneurial spirit would bring economic advancement for all.
Ko Tar, a well-known author and community activist, recently wrote an article titled “The Strength of Villages.” He praises the resilience of villages in Myanmar and their self-initiated measures in curbing the spread of the disease without much support from the government. In fact, throughout the country’s history, including in the aftermath of Cyclone Nargis,[26] villagers have found ways to cope with adversity with little support from their government. Now, as before, villagers are helping themselves. If the country can avoid starvation, it will be in good measure because villagers will find ways to resume farming.
In addition to assuming their usual responsibility of feeding the country, the rural areas are now taking care of those who have been coming home. Ko Tar calls for more visionary support to these returned youths. He recommends assistance for organic farming, planting methods that require less water, and the development and application of salt-water tolerant seeds, for instance. In this way, the unhealthy effects of the sprawling urbanization of the past decade could be reduced as well.
It is true that Myanmar possesses a rural base that is rich in human and natural resources. However, COVID-19 has laid bare core vulnerabilities of the country’s rural development model. Foreign direct investment has been driving Myanmar’s manufacturing and extractive industries; it has pulled many youths away from their native lands as oftentimes cheap labour. If external investment fell or even withdrew as a result of a global economic downturn following COVID-19, workers would lose their jobs – many of them permanently.
At the same time, the greater availability of more affordable lending risks turning from a perceived blessing into a curse. Villagers have been going to great lengths to repay their debts, even when it meant incurring high human and social costs. At the going interest rates of informal lenders and microfinance institutions[27] many of them will no longer be able to do so because of the coronavirus.[28] Lending at such elevated rates has kept the provision of loans profitable but it has stunted rural development and the alleviation of poverty. Unregulated, it could now develop into a full-blown rural debt crisis.
A rural economy that has to rely on high-interest loans, migration and remittances for its survival is a crippled economy. And a rural society that is grounded in this mode of production has nowhere to turn to when migration is severely interrupted. The COVID-19 crisis can provide a unique opportunity for renovating, strengthening and innovating the rural base.[29]
One notable yet regrettable feature of the post-Nargis aid effort, and one that we observe again today, was the absence of a strategic, sector-wide approach to rural recovery, with the result that the rural economy has remained fragile and marginalised. It is time to heed this lesson.
Markus Kostner has over 25 years of experience in the areas of fragility and conflict, violence prevention, crisis response, and social development. He has worked extensively on Africa, Latin America, Southeast Asia, and the Middle East. He has operational and analytical expertise in the fields of demobilization and reintegration of ex-combatants, community-driven development, (post-)conflict engagement, and post-disaster social impacts analysis. Markus served as a core team member of the World Bank’s World Development Report 2011: Conflict, Security and Development. He has worked at the World Bank, the Vienna University of Economics and Business, and the Austrian Ministry of Foreign Affairs, among others.
Myat Thet Thitsar is a co-founder and CEO of Enlightened Myanmar Research Foundation (EMReF) which is an independent non-profit research institute dedicatedly working on social researches in the field of livelihoods, gender, governance, political economy, rule of law and justice and local parliaments. Myat Thet Thitsar has over ten years of experience in social research particularly in the areas of governance, political economy, social relations, informal justice, and peace process in Myanmar. She is also teaching Research Methodology and Political Economy to the classes and academic institutions operated by Civil Society Organizations in Myanmar. She can be reached by email: myatthet.thitsar@emref.org
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