OPINION: The resumption of Kenya’s economy – is now the time?

By Kagwe Kibugu In light of the recent call for the National Government to loosen the curfew and county restrictions, I can’t help but sympathize with the members of the National Emergency Response Committee on Coronavirus who are responsible for the crucial decision. Allow me to express that extreme caution should be taken while doing so. The Kenyan government has done extremely well thus far with the measured and controlled approach it has undertaken to ensure that the livelihoods of Kenyans are protected. In doing so, the number of testings done and the capacity to test has increased significantly since the first Covid-19 case was confirmed in Kenya on March 13, and as a result, numerous deaths and contractions of the coronavirus have been avoided. Nonetheless, all efforts by the Ministry of Health and the Government of Kenya can be undone with one miscalculated effort to resume normal operations in the country. The challenge is, normal operations cannot be resumed under abnormal circumstances. The World Health Organization (WHO) recently warned countries that were seeking to open their respective economies that a potential second wave of contractions could prove to be even more fatal than the initial outbreak. Though there may be a select few that are starting to experience a decline in daily infections, the general observation is that there are still a compelling number of countries yet to experience the peak of the virus, and Kenya happens to be one of many. According to WHO emergencies head Dr. Mike Ryan, epidemics often come in waves, which means that outbreaks could come back later this year in places where the first wave has subsided. Since the beginning of May, we have seen a considerable rise in infections. These numbers have gone up from single figures (19,25, 52, and 80) to record breaking triple digits as a result of increased testing (123 followed by 147). Therefore, as cases start to swell, is now the right time to “reopen” the economy? Let’s take a closer look at countries that have attempted to do so. South Korea recently emerged from the first wave of the coronavirus pandemic largely unscathed in comparison to countries like Italy and the USA. Globally lauded for their initial handling of the virus, their strategy to reopen schools, universities and restaurants has not proved to be as fortunate. According to the South Korean government, 40 newly-confirmed cases (the biggest daily jump in nearly 50 days) has been a concern. Essentially, the government has had to clamp down, halting school re-openings, and shutting down entertainment spots in the Seoul region that had just reopened. China too, is introducing renewed restrictions after two cities reported new cases of the virus. Finally, Singapore had only reported less than 2,000 cases in April, but now has more than 23,000 cases that primarily stem from the relaxation of laws and the assumption that the battle was over. Therefore, blind reopening of the Kenyan economy can lead to catastrophic results. Rushing to conclusions and making decisions because of internal pressure, with inadequate disaster management or planning will lead to a surge of cases, and a heightened risk of death. Not to forget, Kenya’s health facilities are currently incapable of handling any potential outpour of casualties that will be expected as a consequence of eventual mass gathering, freedom of movement and irresponsible get togethers. Additionally, it has already been reported that 61% (29 out of the 47) of the counties in Kenya are now exposed to COVID-19. Assuming the strings are loosened and barriers of inter-county movement are upheld, the potential threat to national health is immense and we are at risk of exposing all 47 counties to a virus we have no solution to, with ill-equipped and understaffed hospitals. We must carefully analyse and then create a delicate balance between controlling the effects of a potential escalation of infections, and restarting a stagnant economy. With over 1.2 million jobs lost over the pandemic so far and an economy that is predicted to contract to 1.0% by the World Bank vis-a-vis an expected growth projection to 6%, it is easy to understand why the government has a decision to make. However, in doing so, there are certain questions that must be evaluated and critically mulled over as arrangements are made to find a solution over the next step. In my opinion, the following questions should be deliberated on:
  • What is the government’s step by step guide or tier by tier phase of gradual “reopening”?
  • In Europe, 1 in 5 workers are on a scheme that is currently being funded by the 5 largest European economies, where 750 million Euros has been disbursed to offset the financial impact felt by SMEs, and rising unemployment. In comparison, does the Kenyan government have any similar policies being planned or developed to ease the burden for those that have nowhere to start after “reopening” the economy?
  • Most Kenyans might believe that reopening of the economy will lead to business as usual, which is not the case. Job losses, curtailed disposable income, irregular cash flow, and consumer fear will present barriers to trade. How will expectations be managed under strict guidelines of business?
  • Employers in the retail and service sectors will likely find fewer customers feeling safe enough to frequent their stores, hair salons, restaurants, and bars. Businesses like these will find few benefits of reopening, and might be unable to meet the cost of staying open. What lies in store for them?
Finally, as we continue to try and make sense of the times, the Government should aim to avoid confusion through conflicting policy decisions and messages around opening and closing the economy. Such confusion may prove to be more socially and economically disruptive. Therefore, the decision to reopen must not be solely driven by loss of revenues. Rather, the priority must be to safeguard the health of our nation. For all the discussion about the resumption of the economy, we must not forget that we do not yet have a full understanding of the pandemic nor has a cure been found. For now, Kenya’s crippling economy may force the government’s hand. The lack of some measure of a safety net to cushion businesses has led to immense pressure to simply return to business as usual. However, it is imperative that the government understands that there may not be any businesses to run if people are not alive to run them. The writer, Kagwe Kibugu, is a Senior Relationship Manager, Equity Bank Limited

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