Kenya private sector alliance calls for resilience as outbreak slows businesses

The Kenya Private Sector Alliance on Tuesday released a survey conducted to understand the projected impact of the novel coronavirus on the economy and across different business sectors in Kenya.

The survey, in which 95 businesses drawn from 17 economic sectors participated indicates that about 61 percent of businesses estimated losses of less than $10,000, while 21 percent reported losses of between $10,000 and $50,000.

"On average 84 percent of businesses have experienced low to moderate impact due to the coronavirus outbreak," said Carole Karuga, the alliance's chief executive officer. "We have received complaints from local traders who import goods from China that their supplies are running out fast following reduced flights to and from the region." 

According to the survey, manufacturing, tourism, the service sector, agriculture, construction and the retail sectors in East Africa are the most affected. There is a shortage of raw materials due to reduced supply from China, as cited by 80 percent of manufacturers surveyed.

However, KEPSA urged resilience among local entrepreneurs in the wake of reduced business by urging them to seize the opportunity to strengthen their local production capacity.

"This may be an opportunity for Kenya to harness and grow local industries, support existing ones to expand their capacity or incentivize creation of new industries for import substitution, as well as leverage in the regional market, such as the East African Community and the Africa Continental Free Trade Area," Karuga said.

Karuga added that Kenya imports intermediate and capital goods from China and 21 percent of Kenya's total imports value are sourced from China. She said that in the first two months of 2020, Kenya's imports from China declined by 36.6 percent. Similarly, exports of Kenyan avocados, tea, coffee, flowers and other products to China have been affected due to logistics problems.

"If you look at the government's push of Buy Kenya Build Kenya, the current shortage gives us a great opportunity to increase our local production," said Karuga. "It also gives us an opportunity to look at areas where we can introduce or increase value addition to our products."

According to the alliance, businesses should adopt technology to minimize human to human interactions through virtual meetings, working from home, business process outsourcing and cashless transactions to stay afloat as the effects of the outbreak continue to bite.

The survey also revealed that a majority of the businesses surveyed have not adopted any mitigation measures to contain the spread of the novel coronavirus at their workplaces, with most preferring to wait and see, while others are waiting for more information from the government.

Fifty-three percent of those surveyed businesses were large companies with more than 100 employees. Micro-enterprises with 1 to 9 employees surveyed comprised 23 percent of those surveyed, while small and medium sized businesses were 13 percent and 12 percent, respectively.