The businesses that Covid-19 has killed

The coronavirus disease threatens to snuff the life out of thousands of livelihoods by wiping out close to half a trillion shillings in economic output.

And for every month that these businesses’ doors remain shut, the country is losing close to Sh42 billion in revenue, which feeds into the pockets of Kenyans and into government coffers.

Thousands of workers have been sent on unpaid leave, setting them off towards an uncertain future with the pandemic showing no signs of abating.

And the economy is already feeling the ripples of depressed business.

Nairobi and other major urban areas are turning into ghost towns as hotel doors shut. Kenyans have reduced their visits to barbers, hairdressers and dentists, and planes have been grounded.

The cheer that characterised Nairobi’s nightlife has been silenced by a dusk-to-dawn curfew, driving the final nail into the coffins of entertainment spots after directives on social distancing were issued.

Border restrictions

Businesses that connect Kenya to the outside world were the first to be hit by the lockdown, as border restrictions and quarantines became the norm following the country’s first confirmed Covid-19 case on March 13.

And as investors around the world remain jittery about the effects of the coronavirus disease that first reared its head last year in China, the flow of foreign investments into Kenya - valued at around Sh425 billion by the Kenya National Bureau of Statistics (KNBS) - will be curtailed.

As it is, most of this money comes from countries that have been devastated by the pandemic. Investors from the UK sent in Sh135 billion in 2018, followed by those from the USA (Sh41.8 billion) and France (Sh15.1 billion).

Financial and insurance activities, which receive close to 40 per cent of this cash, will be the hardest hit should this flow of dollars be disrupted for long. Other potential losers include manufacturing (19 per cent), wholesale and trade (15.5 per cent) and information and communication (7.4 per cent).

Export earnings - from flowers, fresh produce, tea and coffee - have also reduced sharply, forcing some firms to significantly slash their payroll, while others have closed indefinitely.

More than 100 countries have restricted travel as they try to contain the spread of Covid-19. Kenya Airways (KQ) has also ground all its aeroplanes in compliance with the government’s decision to limit the entry of people into and out of the country.

The cash-strapped national carrier has, for the umpteenth time, sought a bail-out from the government.

As a result of these travel directives, virtually all employees in the travel industry have been sent on unpaid leave from April 1.

Top managers at numerous travel agencies, just like those from KQ, had taken a pay-cut of up to 90 per cent. The entire hospitality industry is in a slump. Kenya’s hotels remain empty. Most have sent their workers home to save on operating costs.

The building and construction industry will also not be spared, especially after the government put a freeze on all development projects. The transport and infrastructure dockets had been allocated a total of Sh100.5 billion.

They were yet to spend close to Sh37.5 billion. The freeze means less work for contractors of roads, bridges, dams and so on.

Instead, most of the money will be re-allocated to healthcare, while the rest will be used to cushion vulnerable Kenyans, including the old and poor.

The reduced flow of money from Kenyans abroad will also affect the real estate sector, which has been a major beneficiary of more than Sh200 billion that has been flowing in from overseas. Most of the money has come from North America and Europe, the regions hardest hit by Covid-19.

1. Airlines and travel agencies:

Kenya Airways, the country’s national carrier, will struggle to be the pride of Africa. It is unclear what the cash-strapped airline will look like after it is further battered by the current headwinds. But it is not just KQ that is not taking to the skies – no passenger airline can fly in or out of Kenya. This has, in turn, led to a drastic cancellation of international flight bookings, conferences and events, which resulted in a revenue loss of 85 per cent, according to Kenya Association of Travel Agents Chief Executive Agnes Mucuha.

2. Hotels:

Almost every major hotel has closed and been forced to send its workers home. Serena Hotels was forced to shut down a total of 10 lodges and camps in Kenya and Tanzania until June 15, 2020. The firm has 24 properties.

Other major hotels that have also suspended operations include Kempinski, Dusit D2, Ole Sereni, Weston and Tribe Hotels. However, despite the gates shutting behind them, hoteliers are still optimistic.

“Occupancy is generally at zero. At the moment, we are thinking about the health and safety of our employees, as well as saving jobs … these are discussions that we are having jointly with the Ministry of Labour and labour unions,” said Kenya Association of Hotel Keepers and Caterers Chief Executive Mike Macharia.

Restaurants that have long been meeting points for all cadres of Kenyans have also stopped operations.

The government has also banned all international gatherings in the country until at least mid this month as one of its measure against the outbreak.

3. Dentists:  

The social distance requirement has also sent thousands of dentists home. By 2018, there were 1,270 practicing dentists in the country. “As you are aware, even when the virus is being detected it is done through the mouth and the nose, so you can imagine the virus is more concentrated around those regions.

And then for that reason we are saying you should stop all routine dental procedures,” said Linus Ndegwa Secretary of the Kenya Dental Association.

4. Pubs, nightclubs and other entertainment joints:

Pubs, nightclubs and other entertainment joints have not been spared. They have closed indefinitely.

In a year, Kenyans consume about 553 million litres of alcoholic drinks, or about 1.5 million litres every day, according to figures from KNBS. But with the pubs and other entertainment joints closed, even large corporations as East Africa Breweries Limited (EABL) and Keroche Breweries have hit.

In just a week after the government announced that bars had to be shut, the brewer’s value had shrunk by a staggering Sh25 billion, as jittery investors took flight.

EABL Corporate Affairs Director Eric Kiniti said the brewer’s focus had moved to packaging its products in cans instead of bottles.

EABL Corporate Affairs Director Eric Kiniti said the brewer’s focus had moved to packaging its products in cans instead of bottles.

“Beer production has been severely affected. The little that we manufacture is for sale in cans, with more focus on wines and spirits,” said Mr Kiniti.

The government earns an estimated Sh39.1 billion in taxes from the sale of beer, wines and spirits.

5. Export earnings from tea, coffee and fresh produce

Last year, the country earned a combined Sh278.32 billion from the export of tea, coffee and horticultural produce. These earnings, which are vital foreign exchange for the country, could be wiped out this year, as covid19

The coronavirus however appears will make nonsense of all the challenges that Kenya’s key exports have faced over time. Save for the produce that may have been exported in January and February, the rest of the year might very easily give a zero return for vegetables, cut flowers and vegetables while substantially reducing earnings by tea and coffee.

The industries did not exactly post a stellar performance in 2019 and if anything posted decline in earnings when compared to how they performed in 2018. The sectors suffered from what now appears to be a distant memory owing to different crisis among major buyers of Kenyan produce.

These included the crisis that preceded Britain’s exit from the European Union that resulted in its currency (the Sterling Pound) weakening against other currencies, the devaluation of the Pakistan currency resulting in the erosion of their buying power and US sanctions against Iran, affecting its economy and reducing the disposable income that country had for imports.

The factors led to a 12 per cent drop in earnings from tea, coffee and fresh produce, having earned Sh316.62 billion in 2018. Players had been optimistic of recovery this year but were dealt a curve ball barely before the year started and are now resorting to sending employees home.

With demand for Kenyan flowers having gone down as key markets encourage their citizens to stay indoors, the Kenyan Flower Council said its members had sent home 80 per cent of their workers on leave. It added that it is reviewing the situation and if it persists without signs of abating soon, farms would are in likelihood going to send everybody home.

Kenyan tea, which is the second highest forex earner after tourism will be hit as countries such as Iran and Egypt are among the biggest buyers of Kenyan tea suffering heavy impact of covid19, which will mean reduced exports. Reduced demand could result in a further reduction in price of tea in the global markets.

6. Sale of Mitumba clothes and shoes:

The Kenya Bureau of Standards on Tuesday banned the importation of second hand clothes and shoes in move it expects will prevent importation of more coronavirus cases. This is expected to affect many traders across the country, with markets like Gikomba, Toi in kibera and in fact just about any market in any trading centre is to an extent dependent on trade on second hand clothes.

Kebs managing director Bernard Njiraini said the standards boards had banned importation of used garments and footwear with immediate effect until further notice as a precautionary measure.  He added that the ban conforms with Kenyan standards that prohibit imports from a country experiencing an epidemic.

Second-hand clothes traders accused the government of killing the sector by banning the importation of their merchandise.

Data from the Kenya National Bureau of Statistics indicates that second-hand clothing imports went up by more than 30 per cent to 177,160 tonnes in 2018, raking in Sh17 billion for the economy. The value of mitumba clothes brought into the country has doubled since 2014, when the imports were valued at Sh8.8 billion. The surge over the four-year period points to the key role that these segment of the economy plays in terms of creating jobs as well providing Kenyans with affordable clothing.

“The second-hand clothes market supports two million traders directly and three million other small businesses in related trades, not to mention most Kenyans who prefer the clothing due to prevailing economic conditions,” said the Mitumba Association of Kenya. it added that the clothes go through a process of inspection and fumigation at the source countries.

7. Public transport

While matatus remain key enabler for the economy, the social distance requirements as well as need to increase levels of hygiene has left many with much lower earnings. Occupancy in public service vehicles can only be at a maximum of 60 per cent as per the Ministry of Health’s directive, which enables passengers to keep distance as among the ways of combating coronavirus.

The Kenya Railways Corporation has also reduced the number of passenger trains on Standard Gauge Railway between Nairobi and Mombasa, scrapping the afternoon service to enable the passengers beat the curfew. The SGR service also has to comply with the social distancing requirements.

8.   Sports and entertainment

From the Kenya Open Golf Tournament that was set to take place in March to the World Athletics Continental Tour (May) and the World Under-20 Championships (July) are among the major sporting events that the country was to host this year but have been cancelled. Add to these the local football, rugby and other sporting leagues, which has left the sports calendars bare.

People are not going to theatres and cinema halls.

Event organisers have also been left with little to and many have folded up waiting.

9.  Sports betting

Sports betting has also been put on hold. With no matches being played, there is no betting taking place. This will affect betting companies such as Betika.