Businesses take a hit in 50 days of coronavirus crisis

Monday, May 4th, 2020 00:00 |
Easy Coach buses grounded at Railways bus station in Nairobi. Travel restrictions have affected the public transport industry massively. Photo/PD/DAVID NDOLO

Murimi Mutiga @murimimutiga

It is exactly 53 days since the first Covid-19 case was confirmed in the country, literally turning the nation upside down. Within that short time, life has taken a completely different trajectory for Kenyans. 

Indeed, according to Ipsos global monitor titled What Worries the World, the pandemic dominated concerns across the world in April.

When asked about the most important issues facing their country today, 61 per cent of respondents across all countries covered cited Covid-19.

This worry is perhaps occasioned by the uncertainties brought about by the deadly virus.

The infections in the country stood at 465 as at Sunday, with 24 deaths, while globally, close to 3.5 million cases have been confirmed and more than 240,000 deaths since the virus was first reported in China late last year. 

In Kenya, almost all sectors of the economy have taken a hit. Travel has been restricted and  airlines grounded, schools shut, among other measures that have negatively impacted on learning, tourism, public transport and logistics and other industries.

Thousands have lost their jobs as companies struggle to stay afloat. The unavoidable declines in trade is having painful consequences for households and businesses, compounding the tensions caused by the pandemic whose end is not known. 

Being one of the highest foreign income earners, tourism has borne the brunt of the virus, with travel restrictions, shut borders and the sector’s recovery remains uncertain especially given the over-reliance on foreign tourists. 

While there have been winners and losers in the wake of coronavirus, the latter seem to tip the scale.

The hospitality industry, including hotels and bars are among the worst hit. Recently, Tourism Cabinet Secretary Najib Balala said 90 per cent of the facilities are closed following a government directive, with the country losing some Sh13 billion per month in revenue from the sector.

“This is besides the loss from the investment made by the private sector ,” he says.

Bookings cancelled 

Tourism contributes 10 per cent of the country’s Gross Domestic Product (GDP).

Balala says about 1.6 employees in the sector could be out of employment as the crisis advances. 

Diani Reef Hotel General manager Jotham Mwang’ombe told People Daily the facility was counting losses owing to cancellation of bookings.

“In the month of March alone, we made about Sh43 million in revenue, but since we have reduced operations this means in the month of April we will lose about Sh35 million which was our projection,” he observed.

Tour operators, curio dealers and beach operators, especially those who solely depend  on tourism have been pushed to the edge.  

The public transport industry has not been spared, with long distance public service vehicles (PSVs) forced to ground their fleets after the government imposed a nationwide dusk-to-dawn curfew and banned movement in and out of four counties to tame the spread of the respiratory disease.

The Nairobi Metropolitan Area, Mombasa, Kilifi and Kwale were sealed off after they were identified as the epicentres of the disease in the country.

Most bus companies whose vehicles  ply the Mombasa-Nairobi route have since sent their employees on unpaid leave.

A spot check by the People Daily at the Mwembe Tayari in Mombasa established that the companies that operate Nairobi, Tanzania, Uganda and Rwanda buses have closed their offices.

Twaha Juma, a manager of Naekena Sacco, whose vehicles ply the Mombasa-Taveta-Loitoktok and Nairobi-Mombasa route, says the sacco has opted to scale down operations until the situation normalises.

“We have sent some of our staff on unpaid leave because we can’t sustain them without business,” he said.

The company is now focused on offering courier service. 

Omar Bakari, a manager at the Spanish Bus Company says the firm has sent drivers and conductors on unpaid leave until the virus is contained.

Even for PSVs that are still in operation, earnings have reduced as the government ordered them to reduce the number of passengers on board at any given time in line with social distancing.

Financial crisis

Coast Bus, Mash East Africa, Tahmeed, Chania, Mombasa Raha, Tahmeed, Modern Coast, Dreamline, Crown Bus are among bus companies which have closed their offices and sent all staff home.

Private hospitals across the country are also staring at a major financial crisis due to dwindling number of people seeking medical help for non-coronavirus related issues.

The hospitals are worried that if the pandemic continues, their businesses could crumble.

Many Kenyans have resorted to self medication out of fear of contracting Covid-19 at health facilities.

“The number of sick people seeking services in private hospitals has gone down, this, however short term, has serious financial implications of the facilities,” Kenya Association of Private Hospitals (KAPH) secretary-general Dr Timothy Olweny says.

Mombasa’s Jocham Hospital  proprietor Dr John Chamia told People Daily that the facility has lost between 30 to 40 per cent of its walk-in clients. He says the next two months could prove to a very difficult moment for hospitals due to financial losses.

“Only deliveries and serious cases are coming to the hospital. We are still studying the situation and  soon we will have the true picture of the financial implications this has on our businesses,” he said.

Chamia said despite the drop in revenue, the hospital has not sent any of its employee home. However, he says the situation is not guaranteed if the drop in number of patients surges.

“If the number of patients drop, you don’t sack staff, but if the situation continues to worsen, then hospitals will have to devise ways to survive,” he added.

Airlines, including the national carrier have suspend all passenger flights. Kenya Airways, which was already in financial turbulence prior to the pandemic, is only ferrying cargo.

There are fears that KQ could fail to resume operation after international flight suspension unless it is resuscitated through a government bailout. 

The horticultural sector is also reeling in shock of the Covid-19 impacts, with  demand, especially  from the European market falling sharply.

Kenya’s flower exports have subsequently dropped by about two-thirds, costing the industry and the country millions in revenue. 

The sector which employs about 350,000 Kenyans, estimates to report hundreds of thousands of job losses.

Banks are also feeling the heat. Some such as Standard Chartered Bank have announced  closure of some of its branches due to reduced business activities arising from effects of Covid-19. The bank has shut down eight branches.

The situation is no different for law firms, which have been affected by reduced court operations. 

For event organisers who depend on weddings, conferences and other social gatherings to earn a living are out of employment as long as the government ban on public gatherings is in place. 

With the closure of schools, universities and other learning institutions, owners and employees of these institutions are also reeling from the effects of Covid-19.

Many of private schools and universities have already suspended contracts with their employees.

In Nakuru, private school teachers have had their contracts suspended as the school shutdown enters the third month.

President Uhuru Kenyatta ordered all schools closed on March 13 to counter the spread of the virus. 

The county Private Schools Owners Association chairman John Waweru said learning institutions cannot sustain salaries because of diminished revenue.

“It is not the wish of members to take such action. Some of the schools are still trying to get school fees arrears from parents so as to keep their staff on the payroll during this trying times,” he said. 

Clothes sellers, boutiques, beauty parlours, salons, barber shops and gyms businesses have also been hit hard. 

On the flipside, some industries such as manufacturing are experiencing a boom in the wake of the virus

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