Ten key sectors likely to revive battered economy
It has dawned on the global community that coronavirus could be with us longer than anticipated. As a result, some countries have completely eased off lockdowns and reopened economies. In Kenya, the government is seeking to ease restrictions and in the short term, the following sectors could be up and running soon according to ‘Business Insight’.
The Ministry of Tourism, alongside other related agencies, are currently working with players in the industry to slowly open up the sector.
The government is mulling extending a tax holiday to the sector to help it along. The ministry has also hinted at extending loans to the battered sector.
The Kenya Tourism Board is already working on a policy response with Tourism Cabinet secretary Najib Balala and has assured sector players of the government’s support.
2. Jua Kali sector
According to 2015 estimates, there were 11.8 million people employed in the informal economy, against 2.4 million working in the formal sector.
By 2018 the informal sector accounted for 83.6 per cent of total employmenT. People working in the informal sector typically earn a monthly income of between Sh5,000 and Sh25,000.
Given the impact the informal sector has on the economy, the government will begin easing restriction to shore up its contribution to the economy.
3. Air transport
Kenya Airways is slowly resuming its passenger services that were gravely affected because of the travel bans by the government.
The government lost millions of shillings with the bust Nairobi-Beijing route cumulatively estimated to have cost KQ about Sh857 million.
Recently, the government inked a deal with Ethiopian Airlines to transport cargo in and out of Kenya, much to detriment of the national courier.
The potential effects of the crisis on the telecommunication industry, due to increased traffic, resulting from changes in business operations and potential lockdown is huge.
Indeed there have been challenges with connectivity in certain instances but this has given sector players an opportunity to improve services given demand.
This has also been fuelled by the government which recently readjusted tax brackets for Kenyans in the wake of Covid-19.
This is among the sectors that were allowed to continue operating and the gains have been massive for middlemen and farmers.
Vegetable exports on the other hand has witnessing strong demand, but decreased air freight services is constraining revenues earned from this sector.
Disrupted local harvests in major European, Middle Eastern and Asian markets is driving up demand for fruit and vegetables but the challenge is limited for outbound air freights.
However with easing of cargo flights by Government, demand is likely to increase by the day.
A host of local industries are still working but at reduced capacity. With the government easing taxes, the industry has seen an increase in output which then ensures some form of stability for workers and investors.
This even as analysts predict firms in the industrial and manufacturing sectors are also facing headwinds associated with global supply chain disruptions.
7. Financial sector
After the pandemic, financial institutions have had to contend with reduced transactions and shrinking diaspora remittances.
Some banks, such as Standard Chartered, have closed some of their branches to slash operational costs.
However, because of high demand for liquid cash for emergencies like food and medicine, banks and credit facilities are now opening doors to assist their clientele.
Kenya Bankers Association has however warned that banks will reduce the amount of loans it gives to protect itself from increasing bad loans.
8. Small businesses
Thousands of Kenyans have small businesses that have really been hit because of the after effects of Covid-19.
Government through its relevant agencies have been working on a contingency plan to avoid a full blown disaster with many Kenyans closing shop and remaining jobless thus without money to spend.
Already the challenges small businesses may face in complying with their tax obligations during the affected period is real and now there is dialogue around mitigating potential tax liabilities.
However with the sectors expected in the coming days to slowly get back in work mode; this will be a relief for a lot of the businesses which have loans to repay and salaries to offset as well.
From shop owners to matatus on long travels, this measure is in the short term to provide some confidence in the domestic economy.
9. Delivery Services
This has become an important component during this uncertain times and indeed government has recognised its importance to the point of providing leeway.
A lot of people working from home are now depending on these mobile enhanced companies to access goods and services.
Players such as Glovo and Uber Eats have grown their influence in the retail market by conveniently connecting buyers and sellers.
Important players such as water vendors have been given leeway to sell their wares as long as they maintain social distance.
It is actually considered a very important service considering majority of Kenyans who have lower spending power need convenience and as such these services come in handy at these times of crisis.
Those who engage in providing products like privately requested educational material for homeschooling students have been allowed to operate but after clearance and authentication.