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Richard Ngatia is the President of the Kenya National Chamber of Commerce and Industry (KNCCI).

Fifth Estate

COVID-19 pandemic: Balancing prevention measures with a progressive economy

A year has now passed since WHO declared COVID-19 a global pandemic yet the virus continues to wreak havoc in every corner of the world. On 26th March, 2021, His Excellency the President of the Republic of Kenya, Uhuru Kenyatta issued a raft of measures to address the spread of COVID-19, following the imminent third wave of infections. As the private sector, we commend the Government for the timely intervention to help flatten the curve. We however, observe with concern that the current health crisis has already devastated the local economy and the measures could hurt an already suffering population.

The reality is that the socio-economically disadvantaged people are likely to suffer more. A large percentage of Kenyans work in the informal sector, mostly in the micro businesses and in the Juakali sector.

The sector is likely to record massive job losses and supply-chain disruption, depletion of supply of stock, increase in commodity prices, slowdown in production as well as limited mobility of factors of production.

Notwithstanding that the taxman will be expected to collect his dues from the subdued businesses. At the close of the accounting period, there is not much for the businessmen to smile about the current situation.

The hotel, entertainment and hospitality industries are some of the hardest hit by the lockdown. The uncertainty in the sector is underpinned by the number of events that have been cancelled or postponed indefinitely.

Little consideration has been given to the thousands of people employed as casuals in hotels, bars and restaurants, who lost their jobs as soon as the presidential address was given. These businesses had perhaps just re-stocked for a month or two, in readiness for the traditionally booming Easter season.

Other than the closures, they have to deal with refunds of aggrieved customers, who have cancelled their bookings. Such disruption of the hospitality industry will lead to the loss of rental income as some businesses are unable to raise enough revenue to sustain rental payments from the take-away sales, and might ultimately close the businesses altogether.

The cessation of movement in and out of Nairobi, Machakos, Nakuru, Kiambu and Kajiado has created disruption of the country’s supply chain, as the five counties actively contribute to 60 per cet of Kenya’s GDP.

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Distortion of transport logistics will inhibit movement of agricultural products between counties. Inefficiency in the transport system, coupled with the increased fuel prices will distabilise the movement of supplies and raw materials to and from the five Counties, which form the Kenya’s manufacturing hubs. This is likely to lead to increased cost of living and food shortages in the country.

Our major concern is the disconnect between the situation envisioned by the measures in place and the lived experiences of the resilient and hardworking Kenyans, who were just about to revive their businesses after the first and second wave of the pandemic. With the lockdown measures, their efforts will be rendered futile.

We have received appeals from our members who are representatives of all business sectors, sizes and geographical locations. On behalf of the Business Community, it is our plea that certain measures be re-considered and incentives given to the businesses to ensure continuity and sustainability.

Our efforts seek to curtail distortion in supply chains, lower the cost of production, increase the availability of finance for companies; stimulate demand and markets, prevent business closure and loss of jobs.

To improve financial support to businesses, we urge the government to consider giving small scale businesses recovery financing stimulus by harmonizing all the available funding options into a single portal.

The Chamber will help in reaching out to businesses in the worst-hit sectors such as entertainment, hospitality and transportation across Kenya.

The Chamber remains willing and ready to facilitate small and medium enterprises to access tenders from the government as incentives for business recovery.

We also urge banks and other financial institutions to re-consider extending existing loan repayments to preserve the liquidity of companies. Additionally, the banks can consider moratoriums an commercial rates deferral and subsidies to ensure that the business assets are not auctioned on loan default.

We suggest that the government freezes the minimum tax measure that became effective on 1 January 2021 to help small businesses recover from the pandemic. The minimum tax imposed a rate of 1 per cent of gross turnover is payable when the amount of a taxpayer’s instalment tax payable is less than the amount of the minimum tax.

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Still on taxation, we request for speedy resolution of tax disputes between businesses and the Kenya revenue Authority that could help unlock at least Sh400 billion into the economy.

The recent price review on cost of fuel has exacerbated an already difficult business environment. The Chamber requests that the price of fuel is reduced while the Treasury considers revising VAT downwards to 14 per cent in effort to ease the cost of doing business and cushion small businesses.

An economic stimulus targeting the Juakali sector and other informal businesses would go a long way in turning around fortunes of the investors.

Further, the government should reconsider establishment of fiscal buffers and measures by reviewing the economic stimulus measures such as the immediate activation of the SME Credit Guarantee Scheme and reduction of taxes on essential imports and goods.

We recommend reactivation of County Emergency Response Committee to support ongoing trade and commercial activities within the respective counties. In addition, the provision of essential passes to qualifying business groups would ensure the continuity of inter-county trade movement of goods and exchange of services on essential products to prevent shortages.

On labour and job protection, companies and employers should not lay off employees, but instead consider the possibility of working remotely for their staff, and workforce retraining to adjust to the new way of doing business.

Let us consider those sectors such as tourism, entertainment and hospitality where it is not possible for staff to work remotely. Based on our observations from the previous lockdown, hotel take-away services of food and beverages were not effective for most food vendors and consumers. This was attributed to inadequate hygiene facilities like clean water and soap, and lack of proper packing containers in the small restaurants (vibandas) which provide food to hundreds of thousands of casual laborers’ in the informal sector.

In an attempt to curb the spread of COVID-19 virus, take-away services could lead to the spread of waterborne diseases SUCH AS cholera and food-poisoning.

Noting that hotels, restaurants and bars are a big source of employment, we are of the opinion that measures curtailing their operation be revised. We recommend that the tourism, entertainment and hospitality industries be allowed to re-open and work within strict COVID-19 protocols and operation guidelines to aid their recovery, as well as enable provision of services to the public.

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We further urge the government to reconsider the operation of local airlines, which play a key role in promoting domestic tourism and business logistics.

Most Kenyans use public transport system, which could be one of the potential platforms for the spread of the virus if COVID-19 prevention guidelines are disregarded.

We support the Government’s move to ensure adequate social distancing inside buses and matatus. We recommend that the service operators work within the COVID-19 protocols and that the vehicles be regularly fumigated and sanitizers provided through their respective operations and groups.

The rapid increase in the cost of fuel has already warranted matatu owners to increase fares for public transport. We recommend that the matter be addressed so as not to over-burden the millions of commuters.

In regard to limiting physical contact and managing gatherings, we agree that online learning is a good alternative in order to ensure that the pandemic does not stop the continuity of education.

We applaud the Government and the Teachers Service Commission for prioritizing the vaccination of teachers throughout the country, which gives hope for the possibility of classroom learning. We plead with the government to issue free re-usable masks to all school-going students, prior to the official opening of schools for the next academic period.

We support the Government’s ban of large gatherings and that every person must adhere to all health guidelines and COVID 19 protocols. In our support, we commit to reinforce positive behavior among the business community which will ensure that the health guidelines in place for the prevention of COVID-19 will be observed.

We will continue to urge all businesses to adhere to the proposed guidelines on sanitation, social distancing, wearing of PPEs, temperature checks, and disinfection of common areas.

We are optimistic that individual and collective efforts will defea the virus. Borrowing from the Community based-model that was effective in managing the pandemic in China, we urge every person to be responsible for themselves in order to protect their families and all those around them.

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Lastly, we are enthusiastic of the COVID-19 vaccine roll out program. In order to flatten the curve faster, however, KNCCI proposes that the lockdown be lifted, and instead the following strategy be adopted to curb the spread of the virus and ultimately manage the pandemic:

  1. A lockdown of four days be imposed in Nairobi County, which is mapped by the Ministry of Health as having the highest positivity rate;
  2. During the four days, mass PCR testing be conducted, targeting all occupants of the County.
  3. Those who are identified as positive cases should be isolated in home-based care and taken through treatment
  4. As the testing is ongoing, the vaccination drive should be taking effect simultaneously in the same County since it is the most affected in the country. Priority of the vaccine can be extended to people under 58 who are under great risk of infection. All who are not on treatment should be given the COVID-19 vaccine.
  5. From the results of the mass testing, the County zones with the highest positive cases should be marked as ‘Red’ zones, while the zones with lower rates of infection should be marked as ‘Green’ zones. Strict enforcement should then be in place to ensure that the people in the red zone should not move to the green zones until mass testing, isolation and vaccination has been conducted. This zoning model worked well in China during the peak of its pandemic and could be borrowed as a best practice for Kenya at this time.
  6. In this process, attention should be given to those in the informal sector, such as the Juakali artisans, mama mbogas, hawkers, matatu opertors etc. These are small scale traders who would ordinarily not have the time to queue for the vaccine in local hospitals, yet their nature of work puts them at high risk of being infected or spreading the virus.
  7. After the process has been completed in Nairobi, the same process shall be mapped on the next most infected county, and onto the next, until all citizens get vaccinated.

We recommend that the Government considers our propositions, which are premised on the realities of the common mwanachi who toil every day to earn for their families while also contributing to Kenya’s GDP. We will endeavour to take the lead in ensuring adherence with the COVID-19 hygiene protocols and advocate for the updake of the vaccine within the business community.

Together we shall win this fight.

The author is the President of the Kenya National Chamber of Commerce and Industry (KNCCI).

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