COVID-19 is not an unsound government policy that companies can simply unite to lobby against.
But that hasn’t stopped them from doing everything in their power to halt the spread of a raging Coronavirus.
It is not yet sunset, but the spread of COVID-19 has so far presented a terrible dilemma for many organizations. Some will take huge financial whips and may require a miracle to stay afloat if the situation worsens.
Over the last 48hrs, Safaricom, Airtel, Telkom Kenya; – representing sensitive sectors of the cashless economy, slashed all transfer fees for transactions not more than Ksh 1000.
The Central Bank also allowed for the increase of transactional limits from the current 70k to 150k. Central Bank Governor Dr. Patrick Njoroge says that this move will be a boon to Small and Medium Enterprises (SMEs) who rely heavily on mobile money.
Banks will have limited power to deal with the effects of COVID-19. Yes, they can ease borrowing costs but cannot directly help households and SMEs suffering from COVID-19.
But this crisis could be a huge experiment to the reliability of mobile and internet banking platforms as visits to banking halls become increasingly unfashionable.
Equity bank for instance has pledged to waiver all mobile banking transaction fees for its buffet of virtual applications including Equitel. All its short term and micro loans will also be processed digitally.
The industry responsible for facilitating the spread of the Coronavirus to all four corners of the globe has also been clobbered hard even from a local perspective.
As travel restrictions mount, a possible revenue hit has already been projected for the already cash strapped Kenya Airways.
Low-cost carrier Jambojet also moved to suspend all scheduled flights to Kigali, Rwanda, Entebbe, and Uganda owing to a decrease in airline passengers.
“We would like to assure all the booked passengers that we shall make the necessary arrangements to accommodate them on alternative flights” reads a statement from the carrier.
In a nutshell; many institutions will struggle in the wake of the Coronavirus pandemic. Some will struggle more than others.
Regional governments will also obviously feel it more than anyone else. Tourism, Agriculture, Manufacturing, and health sectors are expected to take the hardest blows.
Nonetheless, professional services and insurance may continue thriving.
A report by real estate firm Cytonn; estimates that if the virus is not contained, the resulting impact may wipe out 25 percent of Kenya’s GDP growth prospects.
Cytonn says that a tax holiday would work in the interest of the local economy if the government moves to grant tax breaks to companies seeking to increase their capacity to produce import substitute goods.
“Consider reducing corporate tax for industries that have been highly affected by the virus such as the aviation industry, or waiving corporate tax for a 3-month period as well as a reduction in payroll tax for the next 3-months for the low-income bracket worker”, a report from the firm notes.
Read the full report here – Cytonn: Impact of Coronavirus to the Kenyan Economy
Dealing with a pandemic of this size will not only be an enormous challenge for the national government but also for the country as a whole. Containing it is now the priority.