Why Big Four agenda could be the biggest casualty of Corona
Seth Onyango @SethManex
President Uhuru Kenyatta’s Big Four economic blueprint faces an uncertain future as the crippling coronavirus pandemic sends the economy into a tailspin.
Experts say the virus threatens to disproportionately hit food security, manufacturing, affordable universal health care and affordable housing in the short and medium term.
Economist David Ndii said all investments are going to be put on hold as the country wade through Covid-19 crisis.
“Coronavirus is shutting down the economy. Investment is dead. Consumer demand has been reduced to food, face masks and internet…real money balances are going through the roof,” he added.
Francis Kamau, a partner at Ernst & Young projected local manufacturing to decline by 70 per cent due to shrinking demand of non-essential goods. “One of the biggest cogs of Big Four is manufacturing but as you drive through Industrial Area you notice there is very little happening. People are not working,” he said.
It comes even as people are hoarding cash and only spending on essential items, such as food, medicine and toiletries, leaving other goods largely on the shelves.
On Monday, Uhuru banned movement in and out of Nairobi and three other counties for the next 21 days to limit the spread of coronavirus, only allowing transportation of mostly food.
“The movement of food supplies and other cargo will continue as normal during the declared containment period through road, railway and air,” he said in an address to the nation from State House.
“I encourage our traders and farmers in fresh produce to continue with their agricultural activities, so as to ensure continued supply of the farm produce to our markets. Farm produce that embodies the diversity of Kenya includes; rice, beans, maize, potatoes, cabbages, miraa, tomatoes, bananas and other food items.”
Kamau projected further shrinkage of the retail space as people tighten their belt in anticipation of the unknown.
Although the President announced tax measures to cushion companies, experts argue that alone will not be enough to save manufacturing which contributes over 10 per cent to the gross domestic product (GDP). Under Uhuru’s new tax regime, local firm hit by lower sales and earnings will pay 25 per cent on their profits down from the current 30 per cent, leaving with a bit of cash for sustenance.
Meanwhile, traders operating small and mid-sized businesses will remit one per cent tax of their sales to the exchequer down from the three per cent rate introduced in January.
On universal healthcare, analysts argued it will be difficult to achieve the affordable Medicare for all since coronavirus since more Kenyans are losing their jobs.
Economist Aly-Khan Satchu said the focus will now be on saving lives, meaning the implementation of Big Four will take a back seat.
“Today, there is only one issue, saving the lives of your most valuable capital, your human capital otherwise the economy will be littered with dead bodies in a zombie like apocalypse,” he told Business Hub. He said there is only one relevant component to the Big Four agenda and that is health, adding that the Angela Merkel (German Chancellor) model is the only correct response.
“Mass testing so as to appreciate the scale of the challenge and then Chinese level quarantining of the infected, otherwise it will be an Ozymandias level catastrophe,” added Satchu.
According to United Nations Development Programme (UNDP), the looming Covid-19 crisis could devastate economies of Africa and slow the continent’s development.“This pandemic is a health crisis. But not just a health crisis. For vast swathes of the globe, the pandemic will leave deep, deep scars,” said Achim Steiner, Administrator of the UNDP.
“Without support from the international community, we risk a massive reversal of gains made over the last two decades, and an entire generation lost, if not in lives then in rights, opportunities and dignity.”
On housing, the local construction industry has already slowed on the back of disruption in material supply and labour shortages.
Kamau said lenders might be uneasy to finance construction projects because of the uncertainty surrounding the completion of projects.