“This is a human crisis,” says the Cabinet Secretary for National Treasury Ukur Yatani as we settle down for an interview in his office at the National Treasury Building in Nairobi.
It is a crisis he has personally tried to gird himself against; he has a mask on his face and gloves on his hands.
The CS is also quick to ensure that the social distance between this writer and our photographer is apt.
“You guys are not well-spaced,” he says, pointing to the photographer “You can sit on the other seat,” adds Yatani.
The Covid-19 pandemic has been described as a health crisis that has morphed into an economic one, but Yatani reckons it goes beyond these two facets.
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The crisis, he says, will define how human beings relate to each other, work, court and even have fun.
“Humanity is at its worst in terms of its ability to challenge nature,” says the former diplomat.
To many Kenyans, the man of the moment is Yatani’s health counterpart Mutahi Kagwe. He has come to personify the current crisis from his daily briefs where he routinely announces new measures to contain the spread of the pandemic.
Kagwe is expected to lead the fight against the deadly virus through the prudent deployment of health personnel and equipment, drugs as well as critical life-saving information.
And this is understandable considering that this is a pandemic, not a financial crisis.
But money is at the heart of the Corona fight, which is where Yatani comes in.
It became apparent when he excused himself in the middle of the interview to answer an all-important call.
“I need to speak to my boss,” he said as he reached for his smartphone.
After the call, he informs his Principal Secretary Dr Julius Muia that they are required at State House later. It looks urgent and the CS asks him to take along a document that alludes to the topic of discussion with the president.
In many ways, Yatani’s ministry will play a big role in solving this crisis - both on the health and economic fronts.
As the Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva and the Director General of the World Health Organisation (WHO) Dr Tedros Adhanom Ghebreyesus recently put it in a commentary in the UK’s Telegraph newspaper, there is a “false dilemma” between the need to save lives and livelihoods.
“Paying salaries to doctors and nurses, supporting hospitals and emergency rooms, establishing makeshift field clinics, buying protective gear and essential medical equipment, carrying out public awareness campaigns about simple measures like hand washing - these are critical investments to protect people against the pandemic,” said the two in the article.
As the chief custodian of the country’s coffers, CS Yatani also needs money to shore up businesses, arrest lay-offs and feed those who might have rendered jobless by the pandemic.
It is nothing short of a miracle for a country that the CS says has little reserves of its own, with many Kenyans living from hand to mouth.
It looks like it is entirely a health issue, but all these resources- which constitute a country’s health system- need money, loads of money.
Kenya’s healthcare system, like that of many African countries, was already weak.
The fragility of Kenya’s healthcare system in the wake of coronavirus was succinctly captured by President Kenyatta during his visit to Washington last month.
By then the disease was just beginning to cross China’s borders. Kenya, the President said, had pulled every stop, including suspending direct flights to and from China.
“Our worry as a country is not that China cannot manage the disease. Our biggest worry is the disease coming into areas with weaker health systems like ours,” said Kenyatta while addressing members of an American think-tank The Atlantic Council.
The disease eventually infiltrated Kenya’s borders, and every new infection has nudged Mr Kagwe into announcing even more stringent measures so as not overwhelm the health system.
The draconian measures aimed at flattening the curve - as experts have described the strategy of reducing infections - have also curtailed human activity. A decline in human activity has meant reduced economic activities.
This has, in turn, translated to fewer taxes, meaning the government will have to revise downwards its revenue projections.
It also means less money to pay the police, teachers, doctors, creditors and even less cash to build roads, schools, dams, airports, seaports. Much of government revenues will now go towards social areas such as health and food as well as giving incentives to ease the pain of the crisis.
According to McKinsey, a global management consultancy, the size of Kenya’s economy might shrink by a staggering Sh1 trillion in a worst-case scenario as the economy contracts by five per cent.
For starters, Yatani needs money to strengthen the healthcare system to flatten the curve.
It costs a lot of money to train and pay health personnel. As of the end of 2018, registered doctors were 11,667, which translate to one doctor for a population of 4,028. This is against a recommended ratio of one doctor for every 1,000 people. There are 110 registered nurses for every 100,000 Kenyans, against World Health Organisation’s recommended ratio of 250 health workers for a population of 100,000.
Reports indicate that it would cost between Sh7 and Sh8 million to set up a standard Intensive Care Unit (ICU) room. The government, according to CS Kagwe, plans to set up 1,000 new ICU beds, translating to a total cost of around Sh8 billion. There are 259 functional ventilators, critical for those infected with Covid-19 as they have difficulty breathing. However, more than half of the ventilators are being used to manage other critical patients.
All eyes are on Yatani. He needs to get money for these critical health resources if Kenya is to avoid a full-blown health crisis such as the one that is unfolding in the United States and some European countries.
He has already received some Sh7.4 billion from the Central Bank of Kenya (CBK), and another Sh5 billion from the World Bank will come in the next few weeks. The global lender has already disbursed Sh1 billion to Treasury.
The CS is also expected to do a mini-budget in which Sh1 billion will be appropriated for the hiring of new health personnel, mostly nurses.
But there is also an economy to take care of. Airlines, hotels, flower companies, night clubs are crumbling. They are going down with millions of jobs, leaving a lot of people without money.
With no income, borrowers will default on their loans; tenants won’t pay their rents, and food will become unaffordable for millions of poor families.
Kenya is also expected to double its special drawing rights (SDR) - some supplementary foreign exchange reserve assets defined and maintained by the IMF - from $37 billion (Sh3.8 trillion) to $75 billion (Sh7.8 trillion).
So far, Yatani’s austere policies have endeared him to many Kenyans as he seeks to break away from the binge-borrowing culture that had been perfected by his predecessor Henry Rotich.
Borrow more
He has been unequivocal that the country has to begin living within its means.
“I want to assure you that we are not only serious, but we have no other option because we have to live within our means,” said Yatani at a past press briefing.
But it looks like he will need to borrow more if the government is to undertake the second layer of measures in which it plans to rescue industries that have been badly battered by the Covid-19 crisis.
They include tourism and hospitality, transport, flower and other export sectors. Besides suspending all non-essential expenditures such as travel and hospitality, MPs through their Parliamentary Budget Office (PBO), have recommended that the government borrow close to Sh150 billion.
Economist David Ndii, who has dismissed the tax-cut measures by Yatani and the House team, wants the Government to set up a lifeline fund to help the businesses staring at bankruptcy.
Yatani still has the legroom to borrow close to Sh200 billion from external creditors, but the global financial market is jittery even as the CS admits no one knows what the future holds.
“There is no definite time, nobody knows. At least I don’t know. We just need to remain optimistic,” says Yatani before heading out for the State House meeting.
In the meantime, he may have to ratchet up local borrowing, taking advantage of CBK’s expansionary policy that saw it cut its benchmark lending rate and Cash Reserve Ratio by one percentage point.
But this has the downside of further crowding out the private sector.
dakure@standardmedia.co.ke
