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How coronavirus pandemic impacts Kenya’s economy

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How coronavirus pandemic impacts Kenya’s economy by Kenyans247(1): Tue 17, March, 2020 01:39pm
Kenya has started assessing the impact of the novel coronavirus (Covid-19) that is devastating cities and causing an economic meltdown across the world.

Kenya’s economy largely depends on the agricultural sector, with tea and coffee exports being the most important drivers.

The second most important engine of Kenya’s economy is the tourism, hospitality and the entire service sector, which relies on people moving and getting services in restaurants, hotels and shopping malls, among others, and a shutdown has a direct hit.


Although it is not yet clear how big the blow will be, the private sector is now coming to terms with the lockdown announced by President Uhuru Kenyatta on Sunday.

The Covid-19 nightmare is threatening to cause a global recession whose impact will be felt in Kenya in weeks to come.

The biggest hit has been on aviation.

International stock markets have also experienced the most painful tumbles, with investors losing billions of shillings.

But it is not all gloom in the business world.


The virus has also come with new opportunities for players in the pharmaceutical, e-commerce and manufacturing industries.

Those in the retail sector, especially e-commerce, have already started experiencing spikes in sales, mostly occasioned by panic buying.

Mobile money transfer companies and banks are also likely to see their fortunes rise in the period.

The Nation is tracking how coronavirus is affecting various actors in the economy and here are some of our findings:

Tourism and hospitality sector

The tourism industry is taking the biggest hit given the measures already taken by the government in shutting down its borders in an attempt to lock out the virus and slow down transmission.

The virus now promises to derail the impressive recovery in the sector which was just shrugging off the impact of terror threats.

The Economic Survey 2019 shows that tourism earnings increased by 31.3 per cent to Sh157.4 billion in 2018.

The number of international arrivals increased by 14 per cent to two million people in 2018, while hotel bed occupancy increased by 20.1 per cent to 8.6 million, of which 52.1 per cent were occupied by residents, indicating the growing importance of domestic tourism.

But the lockdown and various actions geared at stopping the transmission of the virus will have the consequences of reversing these gains.

Aviation industry

Kenya Airways is taking the biggest hit in Kenya’s aviation space, with most countries locking out airlines from countries that have reported cases of coronavirus.

The airline has also been forced to stop flights to China, Rome and all other countries that have already reported the virus.

The International Air Transport Association (IATA) estimates that airlines globally are set to lose up to Sh11.3 trillion ($113 billion) in passenger revenues if the virus spreads further.

Kenya Airways estimates that it is losing at least Sh800 million a month, noting that the situation could change more dramatically in coming days as more restrictions in global travel come.

“The route is important for Kenya Airways flying about 7,000 passengers per month (Nairobi to China). As you are aware, China is arguably the largest trading partner with Africa and Kenya and, therefore, its significance cannot be downplayed. China is also a key cargo origin and a main feeder to regional freighters,” Kenya Airways told the Nation on Monday.


Italy and the rest of Europe are some of the most important nations to Kenya’s tourism industry and the ban on travel has seen hundreds trapped here and thousands others unable to travel.

Various players across the globe are warning that the virus and the travel advisories that have come with it could plunge the global economy into a recession.

At the global level, the epidemic has been projected to cost passenger airlines Sh11.5 trillion in lost revenue this year.

Already, a number of airlines have started to revise their profit forecasts for the year, factoring in the impact of the virus on their revenues.


March 16, 2020
• Mombasa County bans nightclubs and social gatherings.

• Beaches are also closed, a major blow to tourists and holidaymakers.

• The National Transport and Safety Authority (NTSA) suspends drivers’ tests, vehicle inspection and collection of logbooks. NTSA also indefinitely stops issuance of driving licences and number plates.

• Police officers prevent traders from setting up for business at the Jomo Kenyatta beach in Mombasa.

• Nyeri County joins other counties to stop nightlife activities after it ordered all bars and nightclubs to close by 10pm.

March 13, 2020
• Head of public service Joseph Kinyua suspends all non-essential travel to any destination outside Kenya for all government officials, whether on official government business or private business.

• Ambassadors and high commissioners serving in Kenya’s missions abroad to represent the government on international engagements.

• Health Cabinet Secretary Mutahi Kagwe suspends all public gatherings, meetings and events for 30 days.

• Kagwe also announces a 30-day ban on all conferences of international nature and those that have more than 15 international participants.

• Kenya Open golf tournament is suspended until further notice.
• Kenya Airways suspends flights on its Rome-Geneva route in response to developments following the coronavirus outbreak. The national carrier said the suspension was effective March 13 to April 30.

February 28, 2020
• China Southern Airlines, which mostly carried Chinese expatriates, workers and traders into Nairobi, was also forced to suspend flights to Kenya following public uproar over coronavirus fears. The airline had one flight a week and each flight brought in about 200 passengers.

January 31, 2020
• Kenya Airways suspends services to and from Guangzhou, China.

SOURCE https://www.nation.co.ke/business/Economic-cost-of-coronavirus-Kenya/996-5492854-gnf7jh/index.html

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