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Higher fares, long queues and home early; this is how your life is changing

Saturday March 21 2020

matatu strike

Stranded passengers at the Kengeleni stage on Nyali Bridge in Mombasa on November 12, 2018. PHOTO | FILE | NATION MEDIA GROUP 

PAUL WAFULA
By PAUL WAFULA
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Your life is about to change in painful and unprecedented ways in the wake of drastic measures by the government to battle Covid-19.

In the boldest measures yet by any East African nation, Health Cabinet Secretary Mutahi Kagwe on Friday moved to control the number of people who will be allowed in supermarkets, passenger service vehicles, trains, bars, restaurants and other entertainment spots.

The measures will make commuting to work more expensive as the government almost halved the number of passengers using public transport vehicles.

For instance, 14-seater public transport vehicles, popularly known as matatus, will now only be allowed to carry a maximum of eight passengers. This and the fewer passengers available will more than halve the income of players in the industry. Unless the government compensates the operators for the lost revenues, they will inevitably pass this cost to the commuter.

As the clock ticks towards a complete shutdown, Mr Kagwe also ordered the SGR and the commuter rail operators not to exceed 60 per cent of their capacity in passenger numbers.

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In another escalation of the fight against Covid-19, the CS cut down the hours and number of patrons pubs and other entertainment joints can host at a time. He ordered that bars should shut their doors by 7.30pm or risk losing their licences. By closing at this time, they will essentially have lost the prime time; when they make most sales after Kenyans come from work.

With this measure, players in the sector have lost the battle to keep their doors open during the peak times and now must resort to home deliveries, which cannot compensate them for the lost revenues.

As if they had seen this coming, alcohol beverages manufacturers had earlier pleaded with county governments to be considerate when implementing measures to limit the spread of the deadly virus and to avoid actions that could result in a bigger economic impact than anticipated.

Sector lobby Alcohol Beverages Association of Kenya (Abak) had earlier in the day written to Council of Governors chairman Wycliffe Oparanya requesting the devolved governments to uphold fair administrative action when implementing directives.

Abak chair Gordon Mutugi said that while the industry supports the limits on public gatherings to limit the spread of the virus, the decision by 16 county governments to ban the operations of bars and entertainment spots was unwarranted.

 About 9,615 outlets have been affected by the actions taken by county governments in the 16 counties.

“Events related to the pandemic are unfolding at an unprecedented speed, with heavy economic losses across various sectors of the economy,” Mutungi said.

“The alcoholic beverage sector currently supports more than two million livelihoods, who directly depend on the alcoholic beverage value chain for their daily upkeep. Closure of bars disrupts value chains, deepening the negative impact of the pandemic on the economy,” said Mr Mutugi.

“Bars employ more than 250,000 people who, in most cases, earn a daily wage. Closing them will render these people jobless, jeopardise their support for over two million livelihoods and directly lead to social unrest. Ultimately, this could result in social anarchy, including looting, muggings and violent robberies, as has already been witnessed in other parts of the world,” Mr Mutugi warned.

Shopping at supermarkets is set to be another painful process after retailers implement the government’s directives.

Although you can shop any time of the day or night, be prepared to contend with a security officer manning a long queue to ensure compliance.

Employers have also been asked to allow their staff to take annual leave at this time. In addition, those who must come to work must keep the 1.5-metre social distance between them. This will be a litmus test for companies who work in small spaces or have small offices.

Mr Kagwe said the next two weeks are extremely critical for Kenya, and called on all citizens to be disciplined and to follow the government’s directives or witness an escalation of measures.

Open-air markets have, however, been spared until further advised, provided that they observe the hygiene and social distance directive. Shutting down markets could be disastrous since it would mean Kenyans stay at home without fresh food.

While hinting at more drastic measures in the coming days, Mr Kagwe said it was time for all Kenyans to be vigilant and take the disease seriously to avoid further punishment.

“We must plan for the worst-case scenarios and we have the plans on how to take care of every situation. Individuals must also prepare for the worst,” he said, adding that individual responsibility will determine whether the war on the virus succeeds or fails.

Players in the real estate sector say the measures will see a general slowdown in activities in the sector over the next few months.

“What this means is that there will be a slow-down in construction activities, and therefore project completion deadlines could be affected. Visits to construction sites will also be limited,” Mizizi Africa Finance and Operations Director George Mburu said.

He added the sector expects mild effects on instalment payments as customers shift focus to preventive measures such as purchase of food and stocking up on hygiene products.

“We expect this situation to be corrected partly by commercial banks’ resolve to restructure loans, extend repayment periods for credit facilities and waive transaction charges,” he added.

The measures come at a time when the Kenya shilling is taking a beating from the global coronavirus outbreak, after most banks moved their asking rates to between Sh107 and Sh109 this week, sliding past the worst record of October 2011.

The currency is set to be exposed further in the coming days after Kenya starts relying on imports from other nations that are more expensive than those from China.

“The US dollar has been gaining strength globally due to the pandemic and this is the reason the shilling is weakening,” Tony Watima, an economist, said.

“Our public debt portfolio has also increased because more than half is in foreign loans, out of which about 70 per cent is in dollars. The cost of importation will also go up because importers have to buy the dollar.”

Currency dealers said the demand for the greenback was also triggered by the Central Bank of Kenya (CBK), which has been actively buying dollars worth Sh40 billion from the Kenyan market to build its war chest should the worst happen.

This has unnerved an already shaky forex market that is still trying to deal with the uncertainty over the economic fallout from the coronavirus pandemic.

“Most of the demand is coming from the CBK and the law of demand and supply is what has seen the Kenyan shilling weaken,” a currency dealer from one of the banks on Kimathi Street, who requested anonymity, told the Saturday Nation in an interview.

On average, the mean exchange rate for the dollar was Sh105 on Thursday, having moved from Sh102 in quick succession.

This is the second week the shilling is losing ground against the US dollar after Kenya confirmed its first case of the novel coronavirus (Covid 19).

The weakening of the Kenyan shilling promises to increase the cost of imports given that importers now will need more shillings to buy the same quantities of goods than before.

The CBK announced that it would be buying Sh40billion ($400million) between March and June this year, or Sh1billion per month, seen as an extra buffer zone to protect the country against shocks should things escalate too fast.

A weak shilling is bad for the Kenyan economy since it is a net importer. Kenya pays for most of its imports among them oil and machines using the dollar. Most of the debts are also dollar denominated and this means that Kenya will be paying more than initially budgeted for because of forex exchange losses.