Why Kenya is not about to force Covid-19 lockdown

Wednesday, March 25th, 2020 14:00 | By
Central Bank of Kenya. Photo/PD/File

Central Bank of Kenya (CBK) Governor Patrick Njoroge yesterday signalled that the government is not about to impose a lockdown to contain the spread of coronavirus disease any time soon.

His observation came as Kenyans continued feel the effects of a partial lockdown that led to the closure of schools, bars and clubs with restaurants only allowed to offer take away or delivery services. Most offices are also offering services online.

In a televised address yesterday to outline CBK’s monetary policy stance, Njoroge argued that the State has reserved a total shutdown as a last resort after all efforts to contain the pandemic would have failed.

“The point I am making here is that this should relate to a business continuity scenario that is sensitive to health of the workers and indeed the health of the customers.

But beyond that, we are very much in the hands of competent authorities,” he said. 

Chain of transmission

A total lockdown entails extreme social distancing measures meant to help people to stay healthy by breaking the chain of transmission and give the vulnerable population a fighting chance.

Njoroge is confident safety protocols in place will help tame the spread of Covid-19.

“We are completely in the hands of the health authorities when it comes to this,” he said.

CBK is currently mobilising the financial services sector to fortify the economy against a major fallout from the fast spreading coronavirus in conjunction with other players that include local banks and Bretton Woods institutions.

“We do realise that the financial sector provide critical services and those are things that, as you can imagine.

Even in places where they have declared lockdowns, they have indicated that banks and other services need to remain open because of it’s critical rile,” he observed.

“So we have been working with the banking sector to ensure that it  deals with the crisis as we have it today, and if indeed things get worse they can respond appropriately.” 

Elsewhere, Pakistan Prime Minister Imran Khan said on Sunday that the nation cannot undergo a complete lockdown, saying that the poor and daily wage earners will suffer drastically if the government takes the decision.

“Pakistan cannot afford to impose a total lockdown (when)  25 per cent of the people in the country live below the poverty line,” the prime minister said while addressing the nation.   

Italy and Spain have been under intense nationwide lockdowns, with citizens required to stay in their homes except for essential work, food shopping or medical appointments.

Economist Samuel Nyandemo told Business Hub that government was just buying time since an unprecedented lockdown will strain the State rickety coffers with dwindling collections from Kenya Revenue Authority.

“The government is broke, it is just that it doesn’t want to admit,” he said asserting that Treasury needs to implement a three-pronged stimulus package to keep the economy afloat.

First, he advocated for tax holidays for small businesses in the short term to keep them from closing shop.

“Farmers should also be encouraged to boost production to help cope with the growing demand for food, by giving them tax rebates, so that we have enough supplies during this period,” he said.

At the same time, the University of Nairobi economies lecturer wants the government to offer salaried employees payroll tax cuts to inject more disposal income in their kitty.

 For consumers, he wants Treasury to waive taxation on essential goods like maize flour, rice, and cooking oil and cut tax on fuel.

That basically means, momentarily pausing significant chunk of tax regime to keep more cash in people’s pockets.

Healthcare system

With cash in government’s reserve, Nyandemo urged treasury to employ more doctors to bolster the healthcare system which is on the frontline battling the coronavirus pandemic.

The International Monetary Fund in its World Economic Outlook in January 2020 had projected a rise in global economic growth to 3.3 per cent in 2020 up from 2.9 per cent in 2019.

However, with COVID-19, it is increasingly becoming clear that protracted subpar global growth will remain in 2020.

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