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Survey: List of Kenyan businesses likely to suffer from coronavirus effects

NEWS
By Brian George | March 9th 2020

A Kenya Private Sector Alliance survey predicts tough economic times resulting from the coronavirus outbreak.

Likely to be most affected are businesses in horticulture, tea, coffee and mineral ores among others.

Ninety-five of locally-owned businesses participated in the survey of firms drawn from17 sectors. This is in addition to 32 manufacturers who were directly surveyed by the Kenya Association of Manufacturers and whose findings have been integrated into the KEPSA report. 

About 57 per cent of manufacturers have been forced to outsource inputs from other countries as a way of coping with the disruption of the supply chain from China while 29 per cent have resorted to sourcing of other export markets outside China and 13 per cent have downsized their production capacity. Others have resorted to air freighting goods to reduce lead-time.

On average 61 per cent of the businesses reported negative effects due to the Covid-19 outbreak. The impact is very low to moderate for most of the businesses and the financial loss incurred so far averages below Sh1 million.

The country also faces reduced imports of crucial products including consumer and industrial products, motor vehicles, machinery, electronic equipment, appliances, and accessories. China alone accounts for about 21 per cent of Kenya’s imports, meaning USD 3.66 billion worth of products may need to be sourced elsewhere or substituted by local production due to the Covid-19 disruptions.

Other major global sectors affected include tourism and hospitality that may see up to 40 per cent decline this year.

The survey reveals that with travel restrictions and other measures adopted to contain the virus, the global economy is projected to suffer significantly in the short to medium term due to reduced trade volumes and production as businesses scale down operations. 

Some of the immediate areas of impact include slow progress on ongoing development projects being implemented by foreign companies or relying on materials or expertise from affected countries – this may lead to delays in the completion of projects.

According to the Kepsa report, health, finance and insurance sectors are also affected.

Construction and real estate are also feeling the pinch. Most of the realtors cite delayed payments and deferred decision making in Chinese-affiliated projects, delay in equipment deliveries from China, knock-on effects and delay in the opening of hospital projects. 

However, with the prevailing conditions in the Chinese export market, KEPSA sees an opportunity for Kenya to make lemonade. 

“A keen look at Kenya’s exports to China reveals that the major products including mineral ores, rawhides, and skins, vegetable-based textile fibres, tea among others are industrial inputs. With the outbreak of Covid-19, Kenya has an opportunity to drive up local value addition for most of these products and seek alternative markets for the finished products,” KEPSA recommends.

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