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Virus leaving behind a trail of shattered livelihoods

BUSINESS
By Wainaina Wambu | August 17th 2020

A wave of job losses that has hit Kenya in the last one year worsened by the Covid-19 pandemic shows no sign of stopping.

This is the fifth month since the virus was first reported in Kenya, quickly moving from a health to an economic crisis that is leaving a trail of shattered livelihoods to levels not seen before in decades.

Latest government monthly data on health, labour market, transport costs and housing details a rising number of Kenyans out of work owing to the virus.

Six out of 10 households blamed the virus for their unemployment, says the Kenya National Bureau of Statistics (KNBS) survey for the month of May.

With fallen incomes, Kenyans are struggling to pay rent, transport and put food on their table, adds the survey.

Estimates show that more than one million Kenyans are now out of work with the economic recovery from the virus shock expected to take years.

At the onset, the pandemic’s impact on jobs was first felt in the tourism industry, which has lost Sh80 billion in revenue, according to official data.

Hotels were among the biggest casualties of the deadly virus with their mainstay – tourism, events and conferences – drying up owing to restrictions in travel and other measures meant to curb its spread.

“We lost 50 per cent of our revenue of Sh160 billion with the second half of the year being as good as zero,” said Tourism CS Najib Balala last month.

Barely into this month, InterContinental Hotel fired all its employees, saying it was ending its Kenyan operations citing the coronavirus pandemic.

Employees were given a notice of redundancy, with the firm moving to terminate its Nairobi hotel lease.

It is not the first or the last prime hotel that might shut.

Serena Hotels had in May sent its entire staff on unpaid leave with Managing Director Mahmud Janmohamed describing the business as being in a “desperate situation”.

Owners of the iconic Fairmont Norfolk also announced they were shutting indefinitely and would fire all employees.

The owners announced that the Fairmont Norfolk and Fairmont Mara Safari Club would cease operations.

Despite international flights resuming earlier this month, aviation still ranks high among the worst affected sectors of the economy.

The International Air Transport Association (IATA) forecasts that airlines could post a 20.1 per cent drop in profit margin this year, losing Sh8.5 trillion ($84.3 billion).

IATA further projects that the industry will not recover to 2019 levels until 2024, a year later than previously forecast.

Troubles for national carrier Kenya Airways have only been deepened by the virus.

KQ is estimated to have lost Sh10 billion during the pandemic with Chief Executive Allan Kilavuka forecasting a cumulative loss of Sh40 billion this financial year.

This has seen the airline continue announcing planned staff redundancies by the dozens. KQ also said it would reduce its network and offload some assets to stay afloat.

Corporate Kenya has also seen a wave of massive lay-offs and salary cuts as firms move to cut costs and fight to stay alive.

Motor dealer DT Dobie in April issued a redundancy notice to workers amid the economic disruption caused by the Covid-19 pandemic.

May also saw the end of Sameer Africa’s Yana tyres, marking the end of an era for a company that was Kenya’s only tyre manufacturer.  It once employed over 30,000 people both directly and indirectly. 

The retail industry is also among the hardest hit by the virus.

Footfall to shopping malls has reduced significantly as disposable incomes fell.

Retailers are struggling to pay their rent if they have not shut.

The virus has exposed the weak financial position of Tuskys Supermarkets, which has closed four branches including Digo Road (Mombasa), Kitale Mega and Tom Mboya (Nairobi) and Mtwapa Chap Chap (Kilifi).

At least 80 workers from these branches have lost their jobs and the retailer is set to retrench more as it conducts a restructuring to stay afloat.

Africa’s biggest supermarket chain Shoprite Holdings is set to lay off 115 workers as it shuts its Nyali Branch this month, signaling inability to crack the Kenyan market.

This is just three months after it closed its Waterfront branch in Karen, putting 104 individuals out of work.

Covid 19 Time Series

 

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