The Government of Kenya has been challenged to move with speed to fix the economy following economic disruptions in the country occasioned by the Covid-19 pandemic.
Network Action Against Corruption (NAAC) through its Director Gordwins Agutu, says the country needs to embark on economic recovery plans clearly setting out the measures needed to control, curb and well manage the further spread of the virus.
“The Kenyan GDP could shrink by 5 percent if the worst-case scenario of the spread of COVID-19 are realized, the value based on statistics of the loss ranges from USD 10-50 billion driven largely by the fall in domestic consumption demand,”
Dr.Agutu while speaking to members of the press, urged Kenyans to follow the directives issued by health officials and the mitigating skills employed by President Uhuru Kenyatta and former Prime Minister Raila Odinga.
He noted that a complete lockdown would have brought all economic activities to a stand still and that seems to be something Kenya cannot afford at this stage.
Dr. Agutu has urged the government to incorporate people in the informal sector through sensible combination of social distancing measures and additional fiscal measures that provides them with immediate comfort and security.
“The informal sector employs 84 percent labor force, these are workers with no stable income earnings, are not covered by formal safety nets such as pensions or any form of wage protection,”
He added that Kenyan Government announced an additional USD 100million for cash transfers to vulnerable groups across the country to cushion the impact of a drastic fall in domestic consumption.
“The Government further announced an income tax waiver for low income earners, these measures are not only aimed at spurring the demand for goods and services but also have a significant effect in buoying public expenditure,”
Dr. Agutu in addition said that under the economic recovery plan, the government announced a reduction on corporate tax rate from 30 percent to 25percent and also announced that it would clear USD 130 Million pending bills which will go a long way in to improving liquidity in local business.
He added that in plans to boost the economy Kenyan Government announced fiscal measures expected to cost USD 700 Million in Tax Revenue and it will no doubt worsen the already large budget deficit that stands at 5.6 percent.
Agutu says that in the recovery plan, the Government is recognizing that even a flattened COVID-19 transmission cure may have a long tail and potential spikes or a second wave as many fear, more needs to be done and these steps will inevitably demand a larger fiscal outlay.
He adds that the key Government priorities in dealing with COVID-19 impaired economic is more massive testing but it needs to start testing more aggressively and call for international support.
“The current crisis endeavors the government to keenly address the state of public healthcare and the state of devolved health sector,”
The Institution of Governance and Public Policy wants the government to direct Kenya Medical Research Institute (KEMRI) to start the manufacture of COVID-19 test kits to ease the testing burden.
NAAC says that the government needs to expand solid safety nets because a prolonged fall in domestic consumption demand can tank the economy.
“Fiscal measures introduced by the Government will play a role in supporting poor families across the country especially at a time when the regular healthcare infrastructure is already under strain,”
According to the NAAC, the mean age of 20-93 percent of the population are at 55,a country with these demographics simply cannot afford a total lockdown, The Government in partnership with other sectors should thus carry out analysis to identify those that can be sustained even if they were to run at reduced levels of activity keeping supplying chains of essential commodities and supplies will be vital free.
“This is the time to maximize the potential of innovative digital technology to make supply chains smarter and effective in last minute distribution of reaching pocket needs,
He adds that the recovery plan from ailing economic slowdown could take up to two years and Kenya needs a policy guideline in a secure domestic economic recovery plan driven by the public expenditure in order to strengthen healthcare systems and economic recovery plan from international communities and the World Bank.
He urged all actors to undertake the economic recovery plan very seriously by supporting the government.
“The Government’s directive encouraging people to stay at home is the best measure to curb the spread of the disease.”
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