Traders begin to bear brunt of coronavirus
By Peter Theuri | March 15th 2020
The first case of coronavirus was reported in the country on Friday, March 13. Markets responded. The coronavirus fears wiped out a massive Sh120 billion in paper wealth on Friday alone.
With the panic escalating, local businesses are already feeling the scourge of the Covid-19, even more. Already, the emergence of the disease in China and the resulting closure of factories and ports had caused tremors in business circles.
Now, even local manufacturers and businessmen are taking their anxiety a notch higher. Trade is taking another body blow as need for safety becomes urgent.
Kenya imports heavily from China, with most traders in textiles and electronics around the city shipping nearly all of their wares from the Asian economic powerhouse. Kenya’s annual import bill stands at about Sh1.76 trillion, of which Sh370 billion or about 21 per cent of Kenya’s total imports are sourced from China.
But also, the country exports most of its horticulture, coffee and tea to Europe, which has some of the hardest-hit cities in France and Italy. Kenya has banned flights from China and Rome, Italy, which is Europe’s epicentre for coronavirus, which has killed more than 1,200 in the country.
That the Chinese New Year occurs in late January and ends in early February means that shipments for orders made are dispatched before the Chinese break for the holidays. Such orders are made in bulk such that the delays that occur due to the holidays do not affect the markets here. By February 25, all of the orders made had been processed. And that was the last batch.
Again, January is a slow month for most businesses. In readiness for March, when the markets take off after a recovery period through a short February, businesses order a lot of goods immediately after the holidays, which ended on February 4.
The processing, shipping, the delay due to bureaucracy at the Kenyan coast and the transit of goods to Nairobi accounts to just over a month, goods arriving at a time when the earlier stocks are begging for replenishment.
We are already in the middle of March and a lot of traders are in limbo. They are staring at near-empty shelves courtesy of sanctions put on transit of goods.
In Eastleigh, the traders continue to sell to thousands of customers who flock the markets. But at the back of their minds is a fear that the ticking time bomb will explode and they will be exposed.
Stores are empty. Shops have started emptying. But a customer will expect that in the next visit, the shelves will be fully packed, as it always is the case. The situation is getting worse; it will be an unpleasant surprise.
Abdirahman Bashir Ahmed, a trader who imports all of his textiles from China, flies to solicit his wares from the manufacturing giant. He was to travel in February but he did not and neither could he place orders.
Now, his shelves are emptying. He has little left to sell and estimates that he will close shop.
“I do not have alternatives. If the situation escalates, I will go home. All my shipment comes from China,” he says, desperately.
But he would be short of alternatives, in any case.
As it stands, there are not too many economies that would be willing to continue trading and ferrying their produce. The coronavirus disease is fast spreading and countries are taking measures to protect their populace. Airports and ports are closing.
More than 5,000 people have already lost their lives and nobody wants to take risks.
Now that it is in Kenya, even the local markets might suffer once people start panicking and staying indoors.
Abdifatah Hassan, who had planned to place his next order in February, now stares into an uncertain future. Stocks will be running out soon, and all he can do is hike prices to keep smaller wholesalers, who buy from him, away, so he can maintain the stocks he has and be at work longer. He hopes for stability, and the escalating situation of the coronavirus is not doing him a favour.
Like Ahmed, when the stocks finally run out and China’s borders remain closed, and the manufacturers keep away from industries, he will shut his doors and head home.
The situation is the same in Kamukunji.
Nairobi’s trading hub is always busy with buyers and sellers in the narrow alleys transacting business. Most of these traders place orders more often than their Eastleigh counterparts, many a time joining hands to afford a full container worth of goods, and thus always have little stocks that need frequent replenishment.
One of them actually makes orders once every two weeks. Thus, her goods are always docking, and the supply always assured.
But the last bogey landed end of January. Since then, her future looks bleak.
Successive postponements for the opening of industries in China have affected the Kamukunji traders who deal in all kinds of housewares and beauty products.
They heavily depend on China whose prices are low, quality high and variety assured. And now, as their stores and shelves start to empty, they have no option but to hike prices as demand dwarfs supply.
The concern is whether customers will manage to pay the high prices, but the traders have few options.
“As demand rises and supply dwindles, the prices are bound to increase. I doubt customers will manage because the economy is not doing well,” says Koome Mutea, a trader, who feels that there is low liquidity that will lead to customers’ inability to buy.
But the Kamukunji traders have bills to pay, they say, some of which are overdue. They have to pay rent for their shops, and with the reduction of goods to sell, the only option is hike prices to cover for the deficit in volumes.
In Nairobi’s Central Business District, vendors of electronic goods feel the same way.
That most of what they sell comes from China reminds them that their stocks may be the last they have to sell before they close shop. Their hopes have been dashed further by news that the virus is now in Kenya.
Unless Kenya curbs the spread, local manufacturing will close down very soon.
Big economies have struggled to contain the spread of the virus with little success, and Kenya must work hard to contain the spread of the virus.
Travel has been hampered as countries try to protect their citizens. That means imports will be scarce and local manufacturers rely on imports. The automatic exportation ban, as well, will have a negative impact on many Kenyans as their produce will go to waste.
A survey by the Kenya Private Sector Alliance (KEPSA) on the coronavirus impact on Kenya’s economy indicates that 61 per cent of businesses had been affected by the measures being taken around the world to contain the virus.
“There is fear of massive loss of exports markets in the affected regions; that is East Asia, Middle East and Europe due to the current trade and travel restrictions.
“Exports likely to be affected the most include horticultural produce, tea and coffee, mineral ores and fruits, among other products. The country also faces reduced imports of crucial products including consumer and industrial products, motor vehicles, machinery, electronic equipment, appliances and accessories,” said the KEPSA report of March 10.
“About 57 per cent of manufacturers have been forced to outsource inputs from other countries as a way of coping with the disruption of supply chain from China while 29 per cent have resorted to sourcing of other export market outside China, and 13 per cent have downsized their production capacity,” the report added.
But the spread of the Covid-19 around the world may put a damper on Kenya’s effort to turn to other suppliers.
Turkey, one of the alternative import sources cited by Eastleigh’s Hassan, reported their second case of coronavirus.
India, where Kamukunji’s Michael Theuri sources some of the goods from, already has 81 reported cases of the disease.
As health experts grapple with Covid-19, business continues to suffer and Kenya, which heavily relies on the East, feels the sting of business slowdown.
All around the world, uncertainty looms, but there is hope that the virus will be contained and normalcy will return.
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