In January, Kenya’s economy was projected to grow at 6.2%. The first case of COVID-19 was announced in March – on Friday the 13th. It has been a month of learning and unlearning and it looks as if we shall be in this state for quite some time. When the dust settles and it is time to take stock, we can almost certainly say 6.2% is not possible. The economy will take a big hit. More areas of our lives will also be affected, during the lockdown and in the aftermath.
Agriculture accounts for about 21% of Kenyan economy. Whilst some activities in farms will continue, the supply chain is suffering. Supermarkets, greengrocers and open air markets are all operating for shorter duration. Hotels and eateries all have reduced clientele and schools are closed hence bulk food orders are at all time low thus the income of farmers is affected. Many farmers rely on the sales of a season to prepare for the next season. If the cash flow is affected, reduced production can be expected.
With reduced activity on farms, food sufficiency is already a concern. The Strategic Grain Reserve is already running out at a time when we are not even sure how long these uncertain times will last. The Kenyan government is not known for good planning so it remains to be seen how well the needs of the country will be anticipated and met.
Horticultural exports already started suffering weeks ago. The Kenya Flower Council already announced that the industry was losing KSh 250 Mn (USD 2.4Mn) per day and about 170 horticultural farms were running low on cash hence laying off workers at flower plantations in places like Naivasha. Understandably, consumers are only worried about immediate needs such as food and safety in terms of health. Flowers are just too much of a luxury at this time.
The “Hustler” Sector
All businesses will be affected. The large businesses are getting some concessions from the government and although it is doubtful the impact of the measures announced by the president, some relief will nevertheless be obtained. Businesses were facing tough times even ahead of COVID-19 to such an extent that large corporates were announcing layoffs. The government had failed to create a conducive environment and now with the attention take up by this crisis, much less effort is being expended in fixing old issues.
The small businesses will take a harder hit. There are many Kenyans who run side hustles that may not even be registered or in the radar of the government. They however provide employment to their owners and a few employees. Whatever help the government is giving to big businesses will not get to these small businesses. Additionally, some of these hustles require flexibility in operating hours and with the ongoing curfew, those that cannot be done online will not last.
Travel and Tourism
Tourism is the third largest source of foreign exchange inflow. It is estimated that Kenya earned USD 1.6Bn last year from tourism. We can pretty much estimate it will not recover for much of 2020. Actually, make that 2021 and beyond. By the time the global economy picks up and people start traveling for leisure, this sector will be on its knees.
The post-COVID-19 travel arrangements are not clear at this point. Will countries require that travellers undergo mandatory test before/on arrival? Will there be requirements to quarantine? If there will be requirements to self-quarantine, how intrusive will such measures be and will they be to an extent that people will restrict travel to essential things? Also unpredictable is how long it will take before people feel comfortable to criss-cross the globe especially if new waves of COVID-19 pop up in different parts of the world at different times.
The school calendar is already in tatters. Primary and Secondary school pupils went home right with a good portion of first term uncovered. Attending school in second term is looking unlikely and even if it happens, it might only be for the tail-end of second term.
The Ministry of Education is yet to provide guidance on the outlook for two final examinations i.e. the Kenya Certificate of Primary Education (KCPE) and the Kenya Certificate of Secondary Education (KCSE). Possibly, they are watching to see how things unfold. Either way, there will have to be changes on the school calendar and that will affect new classes in 2021 as well as university entry.
Politics and 2022 Effect
If there is one thing Kenyans have enjoyed for the past few weeks, it is the near 100% absence of our politicians arguing on TV, exchanging slurs on during funerals and generally irritating us all. When the dust settles, will they emerge out of the woodwork and start their games all over again?
One would imagine the politicians are sorely missing the spotlight and they will try to make up for lost time, what with the 2022 general elections around the corner? It does not portend well for us if a national leader is already saying they will resume the music. If we get caught up in their din, the road to recovery will be even longer.