Cushion economy, public from critical impact of coronavirus

Kenya is in the grip of multiple socio-economic crises. Never since Independence have we had to juggle between such concurrent and parallel critical threats to our well-being as a nation. Our health, wealth and well-being as a nation are under critical threat by the coronavirus pandemic. This comes at a time when we are yet to resolve yet another significant threat to our food security, the desert locust invasion.

The government should be lauded for the efforts it has made thus far in responding to coronavirus. Commendable mitigation measures initiated so far include: restricting entry into the country to Kenyans and residents only and requiring entrants to self-quarantine; advising on health and hygiene measures including hand-washing, social-distancing and usage of masks; enhanced testing internally and at various points of entry; suspension of learning in all educational institutions; advising Kenyans to use cashless transactions; restricting unnecessary public congregations; closing open-air markets in various counties; closure of morgues and requiring burial within 24 hours of the bodies in various counties to avoid unnecessary and lengthy congregation; recommendation that both  public and private sector entities allow their employees to work from home; and restricting non-essential travel locally and internationally.

However, more can be done through a collective and unified national effort with a 360-degree view of the problem. As with every prescription; the side effects of the interventions by the Government have to be carefully managed lest we cure one disease, the coronavirus, but create yet another more deadly disease to replace it in the form of an economic meltdown. This would become a case of the medication becoming more adverse than the disease itself.

For example, whereas the Government has put in place requisite emergency measures to reign in Covid-19, the measures have the potential to occasion an economic downturn of disastrous proportions unless parallel and concurrent measures are put in place to stabilise the economy, cushion ordinary Kenyans and minimise the effects of containment of the virus on the economy.

With the projected rise in infections in Kenya and worldwide we anticipate that Kenya and other countries will take even more stringent measures to protect their citizens and stem the spread of the virus. These measures will potentially lead to partial and in extreme cases total lockdown in various countries and Kenya may not be an exception. Already, the effects of the coronavirus pandemic and the resultant measures against it are causing debilitating effects on the economy.

Cases in point include the following; The Nairobi Securities Exchange (NSE), was hit as soon as the first case of coronavirus was reported in Kenya with panicked investors making indiscriminate sale of shares resulting into total market capitalisation shrinking by Sh120 billion in one of the largest declines in a single day in the history of the Nairobi Securities Exchange. By March 16, the NSE wiped off more than Sh500 billion in paper wealth for investors.

The tourism industry which in 2018 earned Kenya approximately Sh157 billion while employing 1.1 million Kenyans directly and indirectly is expected to experience significant losses in jobs and revenue given the measures already taken by the government in shutting down borders and restricting entry in an attempt to lock out the virus and slow down transmission.

The 30-day ban on all conferences of international nature and those that have more than 15 participants will further impact performance of this sector. Several counties including Mombasa and Nyeri counties have banned nightclubs and social gatherings, while several beaches have been closed.

Already several hotels, lodges, tour operators, restaurants, entertainment centres and recreational facilities are reporting closures, limited operations and inevitably job losses anticipated to be in their thousands.

With most countries locking out airlines from countries that have reported cases of the coronavirus; the aviation sector will also be significantly affected. Kenya Airways for example has been forced to stop international flights and estimates that it is losing at least Sh800 million a month.

This will also have a significant hit on various sectors of the economy including importers, exporters, tourism and availability of essential goods including medicines and other supplies not to mention the knock on effect of job losses and price hikes necessitated by resultant shortages.

In the period between March 12 and 16, more than 37 cargo ships that supply goods to Kenya and the region had failed to dock at the Mombasa port, having cancelled their arrivals.

Mombasa is the gateway through which Kenya, Uganda, South Sudan, Rwanda, Burundi and parts of Tanzania, Ethiopia and the Democratic Republic of Congo import their goods.

This is likely to see a surge in prices of consumer goods including critical supplies such as medicines in the entire region. It will also impact clearing and forwarding businesses, the transport and warehousing sectors among others, which will also potentially lead to business closures and job losses.

- The writer is a Management Consultant in Nairobi.