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Nurse Abdul Aziz from the Kenyatta National Hospital makes a bed at the upgraded wing of Mbagathi Hospital in Nairobi. [Elvis Ogina, Standard]

The country’s economic growth is expected to shrink in latest projections that have, for the first time, revealed the impact of coronavirus disease on the continent.

The forecast has been issued by the United Nation’s Economic Commission for Africa (ECA). Executive Secretary Vera Songwe indicated Friday that the continent would lose half of its gross domestic product.

Remittances from the diaspora will fall, tourists are already cancelling planned travels while international trade is hurting in the relentless spread of the virus.

More cases of the disease are feared in Kenya after the first confirmation on Friday, where the patient was quarantined but after having interacted with other citizens. Two more people, who had contact with patient zero, have since tested positive to the virus.

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Twenty-two people who had direct contact with the first patient have been under quarantine and await testing within the two-week disease incubation period.

A medical officer stationed at Mbagathi Hospital, where the isolation facility was established by the Kenyatta National Hospital, confirmed multiple inquiries by walk-in possible victims.

Kenya National Union of Nurses chairman Boaz Onchari warned that “the uncoordinated reception of suspected cases at Mbagathi is likely to lead to rapid cross-infection.”

Among the direct costs anticipated by ECA is expenditure of about Sh1.1 trillion ($10.6 billion) on drugs to tackle the novel virus that has formally been identified as Covid-19.

Also at risk are jobs, and inflationary pressures tied to price hikes on foodstuff and pharmaceuticals also being in the gloomy projections.

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“Revenue losses could lead to unsustainable debt,” reported the ECA, which lists Kenya among the most exposed countries in the repayment of foreign loans.

The country will be repaying Sh343 billion on foreign loans in the current financial year, inclusive of redemption and interest.

Kenya’s budget shortfall of 7.2 per cent could also widen following shocks on the economy that are attributed to the virus.

Africa’s economy is projected to grow by a measly 1.8 per cent, from the initial estimate of 3.2 per cent, on impact of Covid-19.

The commission has indicated that oil producers, including Nigeria, Algeria, Angola and Libya, will suffer disproportionally bigger economic blows for two reasons: First, demand for oil has slumped globally owing to slowdown in production and manufacturing, and secondly, prices for the commodity have crashed.

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Cancellation of flights and the lock-down in several countries would only help depress demand for petroleum products even further.

Various analyses show that the price of a barrel of crude oil would remain below $35 (Sh3,600).

Horticultural exports

Fortunately, Kenya is not a major oil producer, but is still hugely exposed in key sectors, including horticultural exports, remittances from abroad, and tourism.

Total lock-downs in several countries that are key markets for Kenya’s agricultural produce means low demand for products that are major foreign exchange earners.

Grounding of cargo flights is already hurting the export business, especially for flowers, which are highly perishable and should reach destination markets within 24 hours of harvesting.

The Kenya Flower Council describes the situation as dire, warning that it will only get worse with the sustained lock-down in European Union countries, which include Italy, France and Spain.

The ECA has also projected that diaspora remittances will shrink, partly due to the slowdown in the foreign economies, where Africans have immigrated. For Kenya, remittances are an important source of the dollar and other foreign currencies. In the year to January 2020, Central Bank of Kenya placed the cumulative receipts at Sh281 billion.

Without the receipts, the available dollar reserves would be depleted, hence making it difficult to buy commodities such as petroleum and drugs from the international markets.

The ECA called for urgent interventions by respective African countries by amending budgets to cater for medical emergencies if the fight against the virus is to be won.

Supply shortages are anticipated for pharmaceuticals, which will inadvertently lead to price hikes.

Products such as hand sanitisers have been retailing at several times the regular price, fueled by panic buying.

Separately, manufacturers are reeling from disruptions of the supply of inputs, especially those products manufactured in China, where coronavirus first broke out.

Covid 19 Time Series

 


United Nation’s Economic Commission for Africa coronavirus Kenyatta National Hospital
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