Cushion citizens from a collapsing economy

Kenya stares at a gloomy future as economic projections indicate gross declines across all sectors. Statistics show poor performance last year. But things can only get worse due to the devastation of the coronavirus pandemic that has grounded economic activity. Productivity has more or less collapsed and companies are recording poor performance.

The “Economic Survey 2020”, which was released yesterday, presents worrying trends. Last year, the economy grew by 5.4 per cent, a near-10-percentage-point decline from 2018. Inflation rose from 4.7 per cent to 5.2 per cent, leading to a higher cost of living. All key sectors such as agriculture, manufacturing, construction and building, transport and service registered lower outputs.

For agriculture — save for coffee, whose outputs rose by 4 per cent, from 41 per cent to 45 per cent — crops, including the staple, maize, registered reduced outputs. Part of the reason for this was poor weather. And that raises the fundamental question of what should be done to secure agricultural productivity.

We’ve often argued that since the country depends on agriculture for its economic mainstay, the sector has to be enhanced through modern techniques and shifting from traditional rain-fed farming to irrigation. Productivity must be supported through effective marketing and distribution models that secure good prices for farmers and guarantee consumers access to the commodities.

Given the prevailing socioeconomic conditions, the country has to think strategically of survival. The hospitality and tourism sector, which ranks among the top income earners, is badly affected. International aviation and transportation have been stopped. Manufacturing and service sectors operate minimally due to Covid-19 containment. Matters have been compounded by virulent rains that have caused massive flooding, mudslides and destruction, killing, displacing and impoverishing many.

The government is hard put to provide interventions to cushion the citizens, especially vulnerable groups, against the vagaries of a non-performing economy. This means rolling out tax relief and cash subsidies, which, collectively, eat into the national earnings.

The imperative is for the government to think of strategies to revive the economy post-coronavirus. The first step is gradual easing of the restrictions to reopen the economy. Critical decisions have to be made that include revising the budget and de-escalating huge capital projects. Loopholes for corruption and wastage of public resources have to be sealed. Emphasis should be on cost-cutting and containment and prudence in resource allocation and management.