Concerns as COVID-19 creates ‘stop-start’ economic cycle

The evolving COVID-19 pandemic continues to throw economic recovery prospects into uncertainty to leaving the country stuck in limbo.

The evolving global health crisis has virtually left Kenya is a stop-start cycle featuring the enforcement of tighter restrictions to contain the spread of new infections and the subsequent easing of measures allowing the economy to breathe.

For instance, while the year begun on a positive note with a near full re-opening of sectors including a return to in-person learning, the government was forced to re-impose tough restrictions in five key counties on March 26.

The re-imposed measures included the closure of all bars in five jurisdictions- the Counties of Kiambu, Machakos, Kajiado, Nakuru and Nairobi.

Similarly, dining in restaurants was halted with the operations of the establishments being greatly limited.

While President Kenyatta later rolled back the tough measures on May 1, the risk of a fourth wave of infections have Kenyans and policy makers concerned.

For many, it might well be a case of déjà vu having seen new restrictions following a surge in infections.

On Thursday, Health Cabinet Secretary Mutahi Kagwe asked Counties to scale up the capacity of health facilities in readiness of a possible fourth wave next month.

According to Central Bank of Kenya (CBK) Governor Patrick Njoroge, the fluid COVID-19 situation in the country has left the monetary policy maker at pains to predict both the direction and pace of economic expansion this year.

“Its true we don’t know what will happen. We are in this very highly uncertain world. We are just monitoring the infection rate just like everyone else,” he told a news conference on Thursday.

“The prospects of the economy and in deed our own livelihoods are completely tied to the fight against COVID-19. We have to project and make our own assumptions but understanding that the outcomes are highly uncertain. Uncertainty is really the order of the day.”

Last year, the economy shrunk across two consecutive quarters between April and September, marking the country’s first recession in nearly two decades on the backdrop of the pandemic’s emergence.

Similarly, an estimated 1.7 million Kenyans lost their jobs between April and June according to data from the Kenya National Bureau of Statistics (KNBS).

The vagaries of the pandemic on economic expansion remain profound in the New Year with contraction following the re-imposition of tighter restriction measures.

For instance, private sector activity shrunk to its lowest level inside nine months in April on the back of reimposed restrictions in five counties.

The roll-out of vaccines has nevertheless provided respite on containing the crisis by creating a pathway for the resolution of the pandemic.

However Dr. Njoroge has warned of risks presented by the lop-sided distribution of jabs across the world.

“There are concerns about the unevenness in the distribution of vaccines which risks another wave of infections or even a new variant,” he added.

The bulk of available vaccines have been distributed in the developed economies, leaving emerging and low-income countries exposed.