The difficult, bumpy road ahead in 2021
Thursday, December 31st, 2020
In a year whose prospects were cut short by Coronavirus shocks, and a government running on empty after coffers run dry amid a surging public debt, Kenyans could be marching into a bleak forecast for 2021.
Already, National Treasury Cabinet Secretary Ukur Yatani has warned of hard times ahead that could lead to delayed disbursement of money for State operations as the country’s debt hits Sh 7.1 trillion.
“I will be dishonest if I say everything is okay. We are in a state never witnessed before. The drastic reduction in revenue and under-performance of the economy is a concern,” Yatani told MPs at the beginning of December.
With thousands of Kenyans out of jobs as a result of Covid-19, schools shut with learners having been forced to stay at home for nine months, the health system overwhelmed, and government coffers running dry, Kenyans could be staring at another difficult and unpredictable year.
The country’s economic output took a downward trend sometimes in May for the first time since the 2008 global financial crisis. Tourism earnings and agriculture exports, the main hard currency earners, have taken a big hit.
Analysts say it may take the whole of 2021 before the tourism sector, where hotels have remained closed leading to massive job losses, recovers fully even with the unveiling of coronavirus vaccinations.
Tourism and Wildlife CS Najib Balala told People Daily that about 2.5 million people in the tourism sector, which controls an estimated 10 per cent to the country’s Gross Domestic Product (GDP), lost their jobs. Balala estimates that the sector shed in excess of Sh100 billion.
Data from the Kenya National Bureau of Statistics and the Ministry of Labour and Social Services indicates that an estimated 4.64 million Kenyans lost jobs during the pandemic period.
“For those who may have been celebrating that they were burying 2020 with all her downwards, they should think twice. 2021 is going to be full of uncertainties, with the inflation rate likely to be high,” said Dr Samuel Nyandemo, a senior economics lecturer at the University of Nairobi.
Nyandemo warns Kenyans to be prepared for a long-winding and rocky road ahead, that would see many struggle to survive.
“The cost of living will obviously shoot up. People should start tightening their belts early to absorb the aftershocks of the Covid-19 pandemic,” the economist warned, adding that the government, which is facing a tax deficit of Sh125 billion, is already struggling to pay civil servants salaries on time, is unable to pay suppliers, contractors and pensioners and other essentials.
Thousands of national and county workers celebrated their Christmas without salaries. The Council of Governors recently announced that the National Treasury was holding Sh78 billion meant for Devolved Units since September, effectively grounding their operations.
Perhaps, to signal what lies ahead, Kenyans are starting the New Year on a day the government is reintroducing taxes which had been suspended in March after the first case of coronavirus was reported in Kenya, in a bid to cushion the economy against the devastating impact of the virus.
Although Members of Parliament (MPs), while voting to end the tax relief, said the move would help plug revenue shortfalls, investors are warning that the move would hamper the economic recovery process. MPs said the tax cuts were unsustainable, pointing to the Finance ministry’s estimate that the government will have foregone Sh65 billion in revenue.
“It is a move that we had to take to revive the ailing economy. Government operations are likely to be paralysed unless the Kenya Revenue Authority (KRA) collects enough revenue,” leader of Minority John Mbadi told People Daily.
The MPs’ vote in favour of halting the tax cuts means a reduction of five percentage points to the income tax rate for top individual earners and corporations will be reversed to 30 per cent.
The VAT rate will be restored to 16 per cent from 14 per cent during the first phase of the pandemic. But MPs, investors and economists opposed to the tax cut reversal say the pandemic had not subsided and Kenyans still needed help.
“It is like abandoning people you have rescued from drowning in the midstream. The economy is still struggling and requires all sorts of incentives and support,” Aly-Khan Satchu, the CEO of investment adviser Rich Management, says.
The tax reliefs aside, Kenyan parents are staring at chaos likely to engulf the education sector as learners resume classes after a nine month unprecedented hiatus.
While the United Nations has warned of a “global education emergency” if learners do not return to school after months of lockdowns, Kenyan teachers are concerned about safety and lack of contingency planning.
The government through Education Cabinet Secretary Prof George Magoha has insisted that all schools must reopen on January 4, and has mobilised teachers, education officials and National Government Administrative Officers (NGAO) to ensure all leaners are in class by the second week of the month.
But the chairman of the Kenya Secondary School Heads Association Kahi Indimuli says government support towards realising the directive has been far from reality.
“They have neither released the money for free education nor the funds they promised for infrastructure development. Only a few schools are prepared to deal with the challenge of social distancing. Most schools are in dire need of more classrooms, dormitories, dining halls and other facilities.”
Indimuli says leaners are also likely to find it challenging to cope up with the tight and congested learning schedule put in place to recover lost time. Apart from the candidates, all learners are expected to cover the lost second and third terms of 2020 before embarking on the first and second terms of 2021
. Indimuli has urged Magoha to come clear on the Sh19 billion the government has promised to disburse to schools and state whether it is for the capitation or infrastructure development. He says from their experience, the government is likely to release the funds sometimes in the month, when it would be too late.
“It is going to be hectic for learners. It is something that is unprecedented that we are not sure whether the young learners will handle,” says Moses Nthurima, the deputy secretary general of the Kenya Union of Post Primary Teachers (KUPPET).
Educationists are also worried over the big number of learners expected to flood public schools from private institutions as a result of closure of the latter due to effects of the pandemic. An estimated 100 private schools have shut down as the owners were unable to pay rent and the more than 300, 000 teachers.
In some cases, thousands of parents are seeking to transfer children from private academies due to hard economic times. The government has not helped matters either, after failing to remit the Sh7 billion it had promised the private schools in loans at friendlier rates to cushion them from effects of Covid-19.
“It is a tricky situation that we find ourselves in. Most of our members may never return into operation unless the government bails us out. At the moment, we have been left on our own,” says Peter Ndoro, the CEO of the Kenya Private Schools Association.
Political scientists like Prof Macharia Munene of the United States International University (USIU)-Africa are also warning Kenyans not to expect any help from politicians as they are likely to throw all their energies and resources to the Building Bridges Initiative (BBI) and the 2022 general election.
“Bearing in mind that those pushing for the BBI have already told us they want the referendum held by July, we do not expect anything from them other than campaigning for its success. They will also be looking at 2022. In short, it will be a year of politics,” Macharia said.
The year 2021 is also beginning on a negative note with reports of the emergence of a new strain of Covid-19, referred to by scientists as SARS-C0V-2 that appears to be spreading faster than other existing strains. And given the fact that some learners have already tested positive for Covid-19, it is expected more learners may contract the virus in school.
Gloomy year Medics are also warning that the Christmas and New Year festivities could lead to a spike in infections. The virus has so far killed 1, 655 Kenyans and infected close to 100,000.
“We are at a crossroads. We are reopening schools a few days after the festive season, which might pose risks. The way we saw people throw caution to the wind during Christmas is worrying,” says Dr Moses Masika, a virologist and a lecturer at the University of Nairobi.
With hospitals seemingly less prepared for another wave of the virus, and the government having stopped meeting hospital bills for Kenyans infected with Covid-19, Masika warns that the year ahead may not be far from being gloomy.
“The government must come up with a better strategy to deal with the pandemic. At the moment, the government has abandoned its own people. We are on our own and nobody cares,” says Dr Chibanzi Mwachonda, the acting secretary general of the Kenya Medical Practitioners, Pharmacists and Dentists Union.
But even as doctors give Kenyans a temporary reprieve by suspending their strike, nurses and clinicians have vowed to push on until all their demands are met.