PERSONAL FINANCE • Covid-19 Has Pushed 2 Million Kenyans into Poverty: World Bank • Khusoko

The COVID-19 pandemic has exacerbated the pre-existing inequities in Kenya with an estimated 2 million being pushed into poverty, says World Bank Report.

According to the Economic Update, Navigating the Pandemic report says this has been through serious impacts on livelihoods, by sharp decreases in incomes and employment following the coronavirus-induced lockdown.

“Kenya’s poor population was predominantly rural and less well education pre- Covid-19. However, the shock of Covid-19 created a new group of ‘newly’ poor Kenyans with demographic characteristics,” said the World Bank.

“They tend to be urban with household heads who are younger and more educated. Newly poor households also end to be smaller and have a larger share of working-aged individuals.”

In Kenya, the unemployment rate increased from 5 percent in the last quarter of 2019 to 21 percent at the beginning of June 2020.

Most businesses that permanently closed are in the wholesale and retail trade sector (38 percent), education (36 percent), and other services (15 percent). In both the industry and service sectors, the majority of closures were due to government mandates (41 percent and 13 percent respectively.

The report says the pandemic moved many adult Kenyans outside the labor force, with the labor force participation rate decreasing from 75 percent in the last quarter of 2019 to 61 percent from mid-May to early July.

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COVID-19 Crisis Amplifies the Urgency for Economic Diversification in Africa

According to the World Bank, COVID-19 not only has affected physical health, but mental health as well, resulting in psychosis, anxiety, trauma, suicidal thoughts, and panic attacks.

“These feelings have a negative impact on the economy through a reduction in socializing, recreational spending, and aggregate demand.”

Going forward, Keith Hansen Country Director for Kenya, Rwanda, Somalia, and Uganda World Bank says, “Supporting firms’ liquidity and digital capabilities remain important to safeguard healthy firms from permanent closure. Furthermore, following the job- and income-losses precipitated by the crisis, support is needed for the “new poor” who have lost livelihoods.”

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