Regulatory and Fiscal measures

Photo by Elton Yung on Unsplash

COVID-19 has had profound impacts on the global economy, largely stunting growth in the Global South and impacting all sectors, including transport. Latin America’s GDP is estimated to have fallen 8.1% in 2020, to be followed by modest projected growth of 3.6% in 2021. (OxfordBusinessGroup) In Africa, projected GDP growth of 3.2% for 2020 is expected to fall to -0.8%, with several countries (including Kenya, Nigeria, Rwanda, South Africa and Uganda) enforcing a partial or full lockdown at the onset of the pandemic. (Deloitte) It is clear that systematic approaches are required to rebuild economies, and fiscal policymaking is needed to enable recovery in the transport sector, as a key driver of economies worldwide.  

Governments are using regulatory and fiscal policy to mitigate the negative impacts of COVID-19 and provide needed relief for transport and complementary sectors. For example, the African Union has set up a Ministerial Coordination Committee on Transport (as well as health and finance) to coordinate regional efforts to fight the pandemic and make key decisions on a joint post-pandemic economic recovery plan. (African Union)  January 2021 saw the launch of the African Green Stimulus Plan, a holistic approach by Ministers of Environment to support governments in building back their economies from the impacts of COVID-19 pandemic in a sustainable manner. (UNEP)  

National governments have been making strides toward revitalising transport and supportive industries.  In Kenya, estimates have shown that one job in the airline industry supports roughly 24 jobs in the broader economy, thus, the collapse of the domestic airline industry would translate to significant losses in other sectors. (Deloitte)  In this context, the government has allocated $91 million to bail out Kenya Airways, noting that bailout packages without sustainability conditions achieve economic but not environmental goals. (BusinessDailyAfrica)  

Senegal has allocated roughly $185 million to economic sectors directly affected by the pandemic, including tourism, transport and agriculture. (KPMG) In Benin, thirty million protective masks were made available to the population at subsidised prices, which were distributed (among others) by public transport operators to employees and passengers, in a bid to re-invigorate public transport and re-mobilise the economy. (African Union

Fiscal support has been provided by cities and companies as well as national governments. In Taguig City, Philippines, registered informal transport drivers (including jeepneys, pedicabs and tricycles) have received cash payments to provide financial support during quarantine.  

And In India, ride-hailing provider Ola has waived lease rentals for its drivers during temporary lockdown periods, and has established the DriveTheDriver fund to support drivers affected by COVID-19 restrictions through emergency support, essential supplies, and medical consultation.  

Asian and Latin American nations have also been looking to maintain trends towards more sustainable transport to combat the pandemic. As part of a wider $41 billion package, China plans to redouble efforts to develop major transport and water conservancy projects and to increase national railway development capital by $14.5 billion. Additionally, China has advanced a plan worth more than $1.6 billion to extend subsidies for electric vehicles to boost the supply of cleaner vehicles in the automotive market. (EnergyPolicyTracker)  Brazil has seen a renewed focus on protecting its biofuel industry amidst declining oil prices during the pandemic, despite potentially adverse environmental impacts. The country has invested approximately $280 million to protect the industry through schemes such as establishing a credit program for working capital for producers of biofuel inputs. (EnergyPolicyTracker)   

Regulatory and fiscal responses can help revitalise transport systems throughout the Global South, and in turn the economies which depend upon them. However, many fiscal measures continue to have negative impacts, with 54% of G20 recovery packages (announced as of October 2020) directed to non-sustainable programs, including fossil fuel support (Climate Transparency). Increased commitment to sustainable recovery packages for transport can achieve sustainable development objectives, and in turn accelerate economic recovery goals. 

This section was developed by SLOCAT Partnership on Sustainable, Low Carbon Transport with contribution from New Urban Mobility Alliance (NUMO) and High Volume Transport (HVT).