Economy vs Need for Health as Kenya Ease Containment Measures

Health Question as Kenya Re-opens Economy Amid Surge in COVID-19 Cases

Mombasa County Health officers conducting mass fumigation

The Kenyan government on Monday announced a “phased reopening” of the economy, with the resumption of international flights from August 1 as well as the lifting of travel restrictions in three counties.

This was also to the realisation that the country’s economy is expected to contract in the second quarter, due to the adverse effects of the Covid-19 pandemic says the Central Bank.

“We project -1.9 percent growth in our baseline scenario for the third quarter. Following an estimated -2.1 percent growth in the second quarter, this implies that Kenya will have entered into recession territory at the end of 3Q20,” said Churchill Ogutu, Analyst, Genghis Capital.

On the other hand, the Ministry of Health confirmed nearly 7,900 cases of the coronavirus with 160 deaths on Monday.

President Kenyatta in his 9th Presidential address on the Corona virus pandemic at Harambee House said “According to the experts and stakeholders (medical scientists and researchers), we have not met the irreducible minimum 100 percent. However, the consensus amongst them is that we have reached a reasonable level of preparedness across the country to allow us to re-open.”

“But we have met a reasonable level of preparedness across our counties. After much reflection, my administration opted for the health argument over the economic argument. More so because we can always revive an ailing economy; but we cannot bring back to life those who die from this pandemic. And with this as our chosen path, we set out to build the irreducible minimums.”

NCBA Research Team collaborates with Kenyatta’s sentiments in their weekly report.

According to NCBA, the COVID-19 pandemic and federal responses continue to drive both investment trends across markets.

“Re-emergence of economies from the COVID induced lockdowns, positive data out of some regions and hopes of a vaccine have bolstered risk sentiment supporting a rebound in risk-based assets.”

What Next?

Ogutu says although they view the odds of a complete easing in the containment measures off the table, ‘the lost demand in the economy may not be easily resuscitated.”

According to Genghis Capital, the country had witnessed a 7-day average of daily confirmed cases edged up to 202 at the end of June from 107 at the start of the month.

“This arguably can be as a result of the increased testing but that belies the stark fact that the epi curve is yet to be fully bent. Therefore, we do not expect complete ease in the current containment measures, which will have a negative knock-on growth,” says Ogutu.

Consequently, Kenyatta warned the reopening was “conditional”.

“In the next 21 days, we shall study patterns of interactions and the spread of the disease. Any trends that signal a worsening of the pandemic, we will have no choice but to return to the lockdown,” he said.

“This order will only bear fruit, if we exercise shared responsibility. My intention is to re-open and to remain open. The ‘clawback’ option is not on my wish list at all,” Kenyatta.

Additional reporting – David Indeje