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Abstract The main objective of this study was to analyze the effect of COVID-19 on social welfare in the case of Afar regional, state, Ethiopia using panel data collected from a sample of 384 in Asyaita, Dubti Samara-Logia, and Awash town. Both descriptive statistics and econometric models were used to analyze the data. The descriptive analysis results revealed that the main source of income emanated from self-employment (81.67%), from the total households 70% of them were engaged in the service sector, due to COVID-19 the income trends of 81% of households decreased, increase expenditure on food & food items (13%) and service delivering (15%). After conducting necessary pre and post-estimation tests, the econometric model found that the three basic policy variables (number of COVID-19 victims, number of days with the COVID-19 disease and transportation ban) adversely affected the welfare of the society by lessening the income of households and growing their expenditures. Finally, considering regional experience, econometric and descriptive results, this study recommends that the government and the concerned policy maker should give more attention and subsidize the service sector, support those self-employee and daily laborers, make awareness to the society about COVID-19 epidemic, place an alternative mechanism to fill potential trade gaps.