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Sectors in Kenya Hardest Hit by the Coronavirus Outbreak

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Despite the East African Community (EAC) having no confirmed coronavirus case, the disease outbreak has nonetheless affected several companies in Kenya risking the situation in the already fragile economy.

Last year, and into this year, several companies have been scaling down or shutting down altogether as the environment for doing business worsened since the 2017 presidential elections. Thousands have lost their jobs while many others are uncertain about their employment future as the situation dims.

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With the coronavirus outbreak, the economic outlook for Kenya remains challenging unless interventions happen to salvage the situation.

Already, the Kenya Private Sector Alliance (KEPSA) has initiated measures to mitigate against the negative effect of the disease which broke out in Wuhan, China. China is a major source market for Kenya while there are some exports that the country gets from Kenya.

Kenyan businesses which have China as their supplier are feeling the heat with most saying that their stock could be in less than two months.

KEPSA notes that 61% of businesses have felt the effect of coronavirus outbreak on their businesses with 84% of the businesses have experienced very low to moderate impact of the virus on their activities.

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In a survey, Business Perspectives on the Impact of Coronavirus (Covid-19) on Kenya’s Economy, KEPSA notes that a total of 127 businesses drawn from 17 sectors of the economy participated in the study.

In ensuring the least of disruptions, KEPSA says that its approach is to complement Executive Order No. 2 of 2020 issued by President Uhuru Kenyatta providing a platform for business to engage with the Ministry of Trade and other offices in government and work on mitigation measures where the government is involved for the sectors affected as well as for future mitigation measures.

To achieve this, KEPSA is focusing on conducting high-level advocacy on cross-cutting policy-related issues and ensuring Kenya is globally competitive in doing business. The alliance is also coordinating the private sector in Kenya through various mechanisms to engage in advocacy to promote economic growth and developing and strengthening Business Membership Organizations (BMO’s) through capacity building.

According to the survey, more than half (53%) of the surveyed businesses were large companies with more than 100 employees.

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Micro enterprises, with 1-9 employees, were 23%while small and medium-sized businesses were 13% and 12% respectively.

The worst-hit sectors are those in arts, entertainment and recreation, ICT, Manufacturing, Mining and Quarrying and Private Security at 100%.

Real estate is the least affected at 40% while other sectors like tourism, agriculture and transport have largely been affected.

Even with the virus being declared a pandemic by the WHO, KEPSA adds that financial losses have been largely minimal with 82% of businesses reporting losses of less than Sh5 million and 61% reporting losses of less than Sh1 million.

On the expected impact on Kenya and EAC region, KEPSA notes that in the first two months of 2020 Kenya’s imports from China declined by 36.6%. Similarly, exports to China have been affected due to reduced demand. Kenya exports avocadoes, tea, coffee, and other products to the Asian nation.

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The sectors that are most likely to be hardest hit are tourism and travel-related segments which sees nearly 6 million visitors to the EAC region annually. This means that the countries will see a decline in their revenue growth from the sector which contributes 18% of export earnings to Kenya.

Uganda earns 18%, Rwanda 30%, Tanzania 26% and Burundi 1.5%.

The affected countries are some of the major source markets for tourists in Kenya and EAC region.

In addition, KEPSA notes that transport and logistics players will feel the pinch due to reduced cargo volumes while industries that depend on imported raw materials, intermediate and capital goods from the affected regions will also bear the brunt. These include manufacturers, construction and infrastructure developers, among others. In addition, Public and private projects being implemented by foreign companies or that rely on expertise from affected countries may also suffer slow progress.

The region will also experience reduced FDI inflows while the wholesale and retail sector will experience a shortage of essential consumer products that are imported.

Read >> Coronavirus Impact to Hit Kenyan Consumers Hard

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Hakeenah N. Njenga
Hakeenah N. Njengahttp://www.businesstoday.co.ke
Kenya is my home and its development and growth my motivation. I have a pen and a story to tell about why #KenyaIsMagical. Do you have a tip? We can showcase Kenya together since there is no place like home. Reach me at [email protected]
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