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Workers, businesses left in the cold as Uhuru tightens measures

BUSINESS
By Dominic Omondi | March 27th 2021

Jawambe Bar and Restaurant in Mombasa. [Omondi Onyango, Standard]

President Uhuru Kenyatta yesterday announced new stringent containment measures even as most of Covid-19 goodies instituted to cushion households against the negative effects of the pandemic lapsed.

The new measures include a partial lockdown of Nairobi, Machakos, Kajiado, Kiambu and Nakuru counties.

The president, however, did not highlight any economic measures to help workers and businesses that will be affected by the guidelines.

“Whereas the foregoing measures will have adverse effects on the economy and constrain our usual way of life, the measures are temporary and necessary to contain the spread of the disease and therefore stop further loss of lives,” said President Kenyatta.

In a way, Kenya has slid back what the International Monetary Fund (IMF) and the World Health Organisation (WHO) described as a ‘false dilemma’, where most developing countries were forced to choose between lives and livelihoods. Such a trade-off, the bodies warned, is counter-productive and might leave Kenyans sicker and poorer.

The president restricted movement of people into and out of Nairobi, Nakuru, Kiambu, Machackos and Kajiado counties.

The five counties control 38 per cent of Kenya’s economy, according to official data.

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In these counties, which together comprise the heartbeat of Kenya’s economy, unfortunately, is also the theatre of Covid-19 infections.

Uhuru noted that 70 per cent of the infections were in these counties.

All meetings in these counties were also suspended and curfew time revised to between 8pm and 4am.

Pubs and bars have also been prohibited from operating while hotels and restaurants can only sell take-away food in the affected counties.

These new measures will most likely affect businesses in these counties, most of which are still reeling from the effects of the pandemic.

Even worse, they come at a time when most of the emergency measures are coming to an end.

Even as the country put in place the containment measures to curb the spread of the pandemic after reporting its first case on March 13, 2020, it also put together other measures to help people whose sources of income had been negatively affected by the pandemic. 

On the fiscal side (government spending and taxation), there were tax relief measures that saw taxpayers pay less in Pay as you earn (PAYE), corporate income tax and Valued Added Tax (VAT).

Additionally, there were cash transfers to the elderly and some select urban households. Both national and county governments also paid pending bills and tax refunds.

On the monetary side, Central Bank of Kenya (CBK) reduced its benchmark lending rate from 8.2 per cent to seven per cent, signaling cheap loans to the private sector. The Cash Reserve Ratio (CRR), or the fraction of money that banks have to leave with the financial regulator, was reduced to 4.5 per cent from 5.5 per cent.

The CBK also struck an agreement with banks that would see lenders allow borrowers distressed by the pandemic to reschedule their loans by between six and 12 months. The borrowers would not be charged for the restructuring. Transferring sums of Sh1,000 and below from one mobile wallet to another was also free. Banks were not to charge any fees for the transfer of money between a bank account and a mobile money account.

However, with the exception of the free transfer of cash from bank accounts to mobile wallets, most of these measures have lapsed. This even as most Kenyans continue to grapple with the tough business environment.

Covid 19 Time Series

 

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