Kenya: COVID-19 Brings Economy to Near Standstill

With people staying at home, conferences suspended, nightclubs closed, schools shut and global supply chains disrupted, Kenya has started walking down the path of nations whose economies have been devastated by Covid-19.

Companies are trying to figure out where to get money to pay their employees at the end of the month due to the impact of the economic shutdown occasioned by efforts to fight the virus.

The service and hospitality industries have the biggest nightmare, given that they need easy customer movement to make money.

Some companies have resorted to engaging casuals as they figure out how to pay permanent staff in a fortnight.

The Kenya Private Sector Alliance (Kepsa) said it would develop a business Covid-19 action platform in the next two days, like other countries have done.

"The action platform will have a 24-hour call centre and a portal to share business and workplace health-related information for all sectors and business sizes, from small and medium-sized enterprises (SMEs) to multinationals, and a framework on the economic impact of the virus, and mitigation that we are collaborating with the government on," Kepsa Chief Executive Carole Karuga said.

This comes as Kenya starts to assess the economic cost of the virus, which is devastating cities, crushing stock markets and causing an economic meltdown across the world.

JOB LOSSES

Wherever it has visited, countries have responded with measures that have shut themselves in, closed their doors to tourists and business travellers. The unintended consequences have been disastrous.

A new United Nations report on the Economic Impact of Covid-19 on Africa suggests the virus will reduce the continent’s growth from the current 3.2 per cent average to 1.8 per cent.

The report says a disruption of global supply chains will lead to a drop in value creation. There will also be demand shocks in the oil and tourism sectors, as well as remittances from abroad.Also expected is a slowdown in investment, hence job losses. For oil exporters, revenue losses of up to Sh6.5 trillion are expected as well as inflationary pressures due to supply shortages.There will also be unanticipated increases in health spending of up to Sh1.06 trillion.The report adds that revenue losses could lead to unsustainable debt and has recommended that the continent take decisive actions, including providing fiscal stimulus packages, such as guaranteeing wages for those unable to work due to the crisis, favouring consumption and investment."As a safety net, provide incentives for food importers to quickly forward […]

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