Global shutdown has cut the flow of money and goods into the country. But even at home, fear is draining cash out of circulation
Coronavirus is robbing humanity of one of its most potent expressions of love - the power of touch.
But when the virus finally releases Kenyans from self-isolation into each other’s arms, the embrace will probably be plain and bereft of warmth.
The virus is leaving in its wake a cold and broke population. It is slowly sapping the vitality of life from Kenyans, exposing them to the vagaries of nature.
It is disarming Kenyans of the most crucial weapon in their battle against disease, poverty and ignorance.
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The fear of coronavirus (Covid-19) is sucking money from Kenyans’ pockets and bank accounts. Virtually everyone, including government, is going broke as the economy gradually shuts down.
A morbid fear of the disease has begun to impede the circulation of money in the economy. This is so much so that when life resets to normal, most Kenyans might not have the money to buy food, pay rent, school fees or medical bills.
Globally, the virus had already taken 14,704 lives by Monday. Kenya has so far been spared its wrath; out of the 340,066 confirmed cases worldwide, the country has only 15 and no fatality.
Unlike in Italy and other European countries, this is not yet a full-blown health crisis. It is, however, already turning into an economic nightmare.
Schools are closed. Factories, offices and court rooms are half open. Soon, there will be just a handful of Nairobi residents gravely going to work, anxious of any whiff of a sneeze.
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There are those who have unsuccessfully tried to convert their dining tables into work stations. Others have taken annual leave and fled upcountry, far away from the madding crowd where the lethal virus is supposedly lying in wait.
But the bigger test is yet to come - though the drumbeats can be heard from afar. People have started running out of cash.
Those whose work is to connect Kenya with the outside world are the first casualties.
Coronavirus is keeping airplanes from the skies. Starting tomorrow, no passenger plane will be allowed into the country, putting the livelihoods of over 30,000 workers at risk.
National carrier Kenya Airways (KQ) has already announced that it will suspend all international passenger services starting tomorrow.
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Earlier, KQ Chief Executive Allan Kilavuka had announced that he would give up 80 per cent of his salary while the airline’s leadership team would forego 75 per cent of their monthly earnings starting April 1.
Amid the lockdowns, border restrictions and quarantines, the International Air Travel Agency has noted that airlines in Africa will be hardest hit.
The agency predicted last week that if the virus spreads more in Kenya, the country is likely to face a loss of 622,000 in passenger volumes. This announcement was made when Kenya only had three cases.
The situation might already have taken a turn for the worse. According to Kenya Association of Travel Agents Chief Executive Agnes Mucuha, the travel industry recorded a decline in passenger bookings of 30 per cent, followed by a drastic cancellation of flight bookings, conferences and events that resulted in a revenue loss of 85 per cent.
More than 90 per cent of forward bookings for the month of April, she added, have also been cancelled since Europe, America and the Middle East issued lockdown notices for non-citizens.
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Low passenger numbers have meant fewer tourists.
Official figures show that the leading occupants of beds in Kenya’s hotels are Europeans. They include the Germans, other unspecified Europeans, British, French, Scandinavians, Italians and the Swiss. These are invariably the countries that have been hit the hardest by the virus.
Italy is the hardest hit after China, with 59,138 cases by end of Monday. There were 24,873 cases in Germany, France (16,018), Switzerland (7,474) and United Kingdom (5,683).
Kenya’s hotels thus remain empty. Some have even started sending workers home.
Export of flowers has also plummeted by nearly 46 per cent, according to the Agricultural Employers Association. Flowers are wilting away in the farms.
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Yet cargo flights, unlike passenger ones, were never embargoed from leaving or entering the country, according to Kenya Civil Aviation Authority Director General Gilbert Kibe.
Flowers can leave the country, but there is just no demand for them in Europe, Kenya’s main export market for horticulture. Horticultural products include flowers, fruits and vegetables.
French beans and avocado, fortunately, are still in high demand in Europe despite the lockdown.
“People have to eat despite the pandemic, and though the exports have dropped by 46 per cent, fresh produce exporters are doing better than the flower farmers,” said Agricultural Employers Association Chief Executive Wesley Siele.
Coronavirus is cruel. After killing with impunity, it restrains those bereaved from coming together to mourn. Elaborate funerals - and weddings - with their attendant bouquets of flowers have been discouraged.
European florists are reported to have doled flowers out for free. In Kenya, low demand for flowers means no revenue for hundreds of farmers. It also means no jobs for tens of thousands of workers.
Worryingly also, machines in some Kenyan factories will soon stop humming as output in China drops by a fifth, according to reports. China is not only the source of the virus but also the factory of the world.
Kenya Ports Authority Managing Director Daniel Manduku confirmed that the flow of container ships at the port of Mombasa had been slightly disrupted. However, he told Financial Standard the traffic would soon return to normal.
“We expected a surge in traffic this year. But there has been a two-month delay, ships are stuck at the port of Salalah,” said Mr Manduku. Salalah is in Oman.
The delay, together with the fact that Kenyan traders were going for other sources of imports other than China, might have resulted into a six-month surge in input costs for manufacturers in February, according to Stanbic’s Purchasing Managers Index.
Covid-19 is not only interfering with the flow of goods and people and money into and out of Kenya, it is also impending their flow within the country.
“We are experiencing partial restrictive measures on movement of goods and people. I believe this is the minimum the government can do given the scenario,” said Scholastica Odhiambo, an economics lecturer at Maseno University.
On Sunday, Health Cabinet Secretary Mutahi Kagwe issued yet another set of stringent measures that will certainly result in further disruption of movement of people and goods. He acknowledged that the economy might take a hit.
Initially, on Friday, the CS had directed that 14-seater matatus carry a maximum number of eight passengers in keeping with the spirit of maintaining ‘social distance’ of at least one metre and ensuring ultra-cleanliness to stop the spread of the virus.
Twenty-five seater matatus should have a maximum of 15 passengers while 30-seater ones and above are expected to maintain 60 per cent maximum seating capacity.
This is likely to hit a transport sub-sector that was already grappling with low passenger numbers following Uhuru’s directive that all schools be closed and employees work from home.
Around 5 million people use matatus every day, according to reports.
Following the new stringent measures, matatus are now torn between hiking their fares to compensate for the lower capacity or plugging on with less revenue.
The tough measures also apply to the Standard Gauge Railway and commuter train services that run on the old railway.
Output from the transport and storage sector was Sh1.25 trillion at the end of 2018, according to official figures. About 74,700 people regularly got their wages from the sector during this period, while another 463,700 were in the sector’s informal wing.
If people and goods - and money - continue to be immobile, malls and open-air markets will soon run out of traders. Supermarkets, general stores and dukas will run out of stock.
Major urban areas such as Nairobi might turn into ghost towns.
Without adequate stock, prices of essentials, especially foodstuff, would go through the roof. With fear of an impending lockdown, panic-buying might have started.
Already, there are reports that prices of aromatic pishori rice from Mwea, Kirinyaga County, have shot up with a kilogramme going at Sh150 from less than Sh120 two weeks ago.
This is an existential threat to the millions of poor Kenyans for who food already takes up almost half of their income.
Even worse, to stop the spread of the virus county chiefs are closing down open-air markets, where more than a third of Kenyans buy food, according to a study by the Kenya National Bureau of Statistics (KNBS). Millions of others eke out their living from these market places.
Kisumu Governor Anyang’ Nyong’o last week closed Kibuye market, one of the largest in the region. His Kisii counterpart closed Daraja Mbili, triggering an outcry from traders.
However, Mr Kagwe said open-air markets should remain open, but traders must observe all the measures aimed at keeping the virus at bay. He has also directed that restaurants remain open but only to sell take-away food.
However, pubs, nightclubs and other entertainment joints have not been spared. They are to close 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.
“Bars employ over 250,000 people, who in most the cases earn a daily wage,” said Gordon Mutugi, the chairman of Alcohol Beverages Association of Kenya, adding that the businesses support over two million people.
The government earns an estimated Sh39.1 billion in taxes from the sale of beer, wines and spirits.
There is also a looming shutdown of the Mombasa Tea Auction, one of the largest in the world. Tea prices at the auction have dropped to the lowest in a year, in what is a threat to the livelihood of 600,000 small-scale farmers and employees.
More than 3 million kilogrammes, or 20 per cent of the volume of tea offered for sale at the auction on Friday was not sold.
According to University of Nairobi economics lecturer Gerrishon Ikiara, the impact of the virus will linger for long.
“Even if the virus was to be contained today, it would take long for its effects to be addressed,” he told Financial Standard.
With poor export earnings from flowers, tea and coffee, as well as low tourist receipts, the country’s foreign exchange reserve is being depleted. Under pressure, the shilling at some point on Friday sunk to 106.5 against the dollar.
Other sources of forex such as diaspora remittances are likely to fall as economic activities in North America and Europe decline.
A weak shilling means increased cost of living as Kenya, a net importer, buys goods from the world market at a higher price.
Without vehicles on the road, airplanes in the skies, machines humming in factories or people lighting up their offices, the country might not reap the benefit of the record low oil prices.
In fact, the weakening of the shilling takes away the gains the country might have made from the drop in the price of petroleum products.
A slowing economy has shaken the stock market. In a week, investors lost Sh132 billion in paper wealth at the Nairobi Securities Exchange (NSE).
All the indices - NSE-20 Share Index, NSE-25 and the All-Share Index dropped by 9.14 per cent, 9.31 per cent and 6.08 per cent respectively.
With little economic activities, government might also find itself broke. By end of February, the government closed its accounts with a paltry Sh2.8 billion. This denied it the firepower to combat the health and economic impact of the virus.
It has, however, promised to pay its pending bills and VAT refunds to inject much-needed cash into the economy.
Treasury has also received Sh7.4 billion from the CBK, which the latter gained after some Kenyans failed to beat the September 30, 2019 deadline for exchanging the old Sh1,000 notes with new ones.