There is global concern about how coronavirus pandemic will affect the economy of most African countries’ economies. With the increasing cases of coronavirus, Kenya is likely to undergo serious economic breakdown. This article highlights the reasons why Kenya is likely to undergo serious economic struggles during the coronavirus crisis.
Reasons why Kenya may undergo economic struggles due to coronavirus outbreak
Kenya’s economy largely depends on exports
Kenya is one of the most vulnerable African economies to coronavirus pandemic. This is because the economy largely depends on exported commodities for economic survival. With coronavirus hit on many foreign countries, there’s no hope for Kenya’s economy during this crisis.
China is the biggest of Kenya’s trade partners and is one of the hardest-hit countries with coronavirus. Because of this, there are no exports currently to China or any other country because of the pandemic. Besides, many countries have put lock-down in place which makes it impossible to export commodities.
With China stopping buy what Kenya has to sell, dependence on the Chinese market is seen as a liability to the Kenyan developing economy. This is because millions of buyers are stuck in their houses and China has lost the ability to buy commodities with the increasing impact of the pandemic. The situation is slowing down consumer spending and this is reducing demand for Kenyan tea.
Tourism sector to fall out
The tourism industry is receiving the biggest hit due to the pandemic. This is because the government is planning to lock-down all its borders to reduce the rate of transmission. This will bring an even greater impact on the young Kenyan economy because tourism is one of the major contributors to national GDP.
The situation has already made things worse as most investors have sold their shares because of fears of the pandemic. This is an economic problem in Kenya because currently there is a serious drop in investors’ revenue.
According to Kenya’s business report, 61% of businesses in Kenya reported negative reports because of the coronavirus infection. Businesses are experiencing financial losses because of a decline in consumer spending.
Major stocks in Kenya such as the Cooperative Bank of Kenya and Safaricom experienced a decline of over 5%. This tells you that bad economic times are just starting worse may be yet to come.
Low cargo volumes at port Mombasa
Cargo volumes are currently dwindling because of coronavirus pandemic. If Kenyans fail to contain the virus, there are chances of further decline in the cargo volume. This is likely to bring an economic crisis in Kenya because it contributes to the countries national GDP.
Recent reports show that how the coronavirus will hit African countries economically depends on their connection to China in terms of exports and imports. Because Kenya highly depends on the Chinese market, they are likely to face an economic breakdown.
The fact that Kenya largely depends on the Chinese market for economic survival is the main reason why Kenya is likely to undergo serious economic struggles during the coronavirus crisis. Another reason why Kenya may find it difficult to survive the economic effects of coronavirus is corruption. Kenya needs to find ways of maintaining economic security before this pandemic get worse.