Yatani must work magic to jumpstart battered economy

Monday, June 15th, 2020 18:26 |
National Treasury CS Ukur Yatani in Parliament in Nairobi. Photo/PD/Gerald Ithana

When Ukur Yatani was appointed Acting Treasury Cabinet Secretary almost a year ago, the last thing he would have imagined is that he would be plunged headlong into one of the most severe crisis Kenya’s economy has ever faced, and his leadership capacities would be tested beyond limits.

The paradox, and tragedy, of the Covid-19 pandemic is that measures to contain it hit the economy severely.

These measures require people to stop moving to arrest the virus spread. Movement restrictions, including complete lockdowns at the most extreme of cases, have hit economies hard.

Kenya is no exception, and these measures have affected the economy severely. Jobs have been lost, businesses closed, and economic activities stalled as people stayed at home, or were restricted from moving from one location to another. 

All this has happened at a time when the government has been called upon to spend billions to ameliorate the worst effects of the economic slowdown.

The government has undertaken measures to support vulnerable Kenyans through cash transfers and food distribution. 

It has also spent billions on measures to support the economy, including prioritising immediate payments of outstanding value added tax refunds and pending bills to businesses.

It has been forced to take these measures even as tax revenues slump from an economy that is simply in neutral gear.

The government has started reopening the economy, a cautious gradual venture that will take months before all economic sectors are allowed to become fully operational.

Some critical sectors such as education will only resume in September. Air transport will probably remain grounded throughout this year, making a tentative return in 2021.

This is bad news for sectors like tourism that depend very heavily on movement of people across countries and continents.

Meanwhile, other crises that continue to bedevil the country.

Floods have swept a huge swathe of Kenya, as a result of heavy rains that have been witnessed this year.

Hundreds of thousands have been displaced, and crops have been swept away, leaving communities at the risk of famine.

This is a disaster that the government has had to intervene to rescue people, provide them with shelter and food, and move them to higher ground until floods subside.

After the floods, the big task of rebuilding communities, restocking and replanting, and implementing permanent solutions to what has become a perennial problem will then begin.

In the meantime, the locusts invasion menace is once again rearing its ugly head. The Food and Agriculture Organisation has warned of an imminent second plague as locusts start breeding from mid-June.

This breeding will coincide with the harvesting season, threatening food security in the country. 

Already, swarms have been seen in Turkana, Samburu, and Marsabit, already reeling from impacts of floods.

The government has started the fight against the locusts in those areas to ensure that not only are the hatchlings destroyed, but the swarms do not grow into a full fledged plague.

It would be a tragedy if locusts destroyed this year’s harvest, at a time when the country is fighting the Covid-19 pandemic.

To the country’s credit, there has been no shortage of food despite the strained supply chains and restrictions due to the pandemic.

With all these crises, the government must stimulate the economy so that productivity starts. The economy must be jumpstarted and coaxed back into health. This is the mosaic that is confronting Yatani.

Yatani has just read his budget, through which he attempted to walk through the minefield presented to him by all these conflicting priorities, at a time when his space for manoeuvre is so limited. It is no easy walk.

Further, these are very unpredictable times. That is why his eye must be on the wind vane at all times because for the next one year, he’ll be a pilot flying a plane through a storm with very limited navigational aids amid capricious weather.

If this looks like mission impossible, it is because it is a very tall order.  Kenyans are hoping, and praying, that Yatani proves that he has a magic wand. He has no choice but to work the required magic! [email protected]

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