Kenya could be greatly affected by the economic impact of the coronavirus outbreak after imposing a 30-day ban on all international conferences as a cautionary measure to contain the spread of the coronavirus the Health ministry announced.
The ban will affect over 15 foreigners who had been scheduled to come to the country. Key among the activities include the annual Magical Kenya Open golf tournament that was scheduled to take place between March 12 and March 15 at the Karen Country Club.
Kenyatta International Convention Centre (KICC), has already called off two major conferences and four exhibitions of international standard.
They include the Next Einstein Forum 2020 Global Gathering(March 10-13) and the 4th Pan African Youth Conference(March 24-26).
Affected exhibitions include the Oil and Gas Expo, Build Expo, Auto Expo and the China Trade Week for this year.
Health Cabinet Secretary Mutahi Kagwe who doubles up as Chairman of the National Emergency Response Committee said the 30-day ban will take effect from March 6.
“If a conference or meeting involves people traveling from Europe, the Middle East or so on, we have asked that you suspend at least for the next 30 days,” he said.
“The tourism sector is going to be severely affected,” he said.
The Government also issued a travel advisory to all Kenyans to avoid non-essential travel to high-risk countries for conferences or meetings where more than 15 people would be gathering.
Organisers of the golf tournament said they respect the decision of the government.
“I have conveyed the Government of Kenya’s decision to the European Tour and they have assured us of their full support and we will be announcing new dates for the championship in due course,” Mr Peter Kanyago, the chairman of the Kenya Open Golf, said in a statement.
For the past five years, Kenya’s meetings, incentives, conferences and exhibitions (MICE) tourism segment have been on the rise.
“It is time we start thinking of how we can push more local content. From conferences to hotel packages, which will help sustain the industry,” KICC chief executive Nana Gecaga.
MICE contributed 13.5 percent of total 2,048,834 international arrivals in 2019, where at least 276,592 visitors were here for meetings and business.
The sub-sector remains key in tourism receipts which last year grew 3.9 percent to KSh163.56 billion.
Globally, MICE is a fast-growing industry, estimated to be worth over $30 billion, with an estimated 50 million MICE travelers annually.
61 percent of Kenyan Businesses read negative business
The Kenya Private Sector Alliance (KEPSA) new study, ‘Business perspectives on the impact of the coronavirus on the economy’, found out that on average 61 percent of the businesses reported negative business effects due to the Covid-19 outbreak.
The impact is very low to moderate for majority of the businesses and the financial loss incurred so far averages below KSh 1 million.
“About 61 percent of the businesses surveyed estimated losses of less than Ksh 1 million, while 21 percent reported losses of between Kes 1 million and 5 million,” the report states from a total of 95 businesses participated in the survey drawn from 17 sectors of the economy.
In the manufacturing sector, the most affected are textile and apparel (25%); plastics and rubber (14.29%); building, mining, and construction (14. 29%); food and beverages.
China alone accounts for about 21 percent of Kenya’s imports, meaning USD 3.66 billion worth of products may need to be sourced elsewhere or substituted by local production due to the Covid-19 disruptions.
“This may be an opportunity for Kenya to harness and grow local industries, supporting existing ones to expand their capacity or incentivizing creation of new industries for import substation as well as leverage on the regional market.”
“There is need to provide targeted support to key industries to support key industries in their expansion of capacity or establish new industries to manufacture import substitutes locally.”
According to ICAEW Economic Update, Kenya’s medium-term tourism prospects remain robust, despite the coronavirus outbreak currently being witnessed globally, supported by improvements in infrastructure, better air connectivity and easing visa regulations around Africa and the rest of the world.
However, the outbreak of the coronavirus represents a more significant threat.
“Unfortunately, the coronavirus now represents a significant downside risk over the short term. While China still does not rival certain European countries and the US in terms of the origin of international tourists, arrivals from the Asian giant have increased sharply in recent years. Markedly slower growth in China and its effect on demand for Africa’s exports will, however, hold more serious economic implications for the continent.”
Michael Armstrong, ICAEW’s Regional Director for the Middle East, Africa and South Asia, said: “Kenya’s economic diversification strategies are increasingly buffering its economy from global shocks. More African countries, including Kenya, are prioritising the promotion of tourism as part of this plan. Ongoing investment in infrastructure projects, resilient exports and the associated benefits from regional economic integration in the subregion will reinforce growth projections.”
The Kenyan shilling has already taken a hit having depreciated by 1.6% against the US Dollar to Kshs 102.6, from Kshs 101.0 week ending Feb.6, due to increased demand for the dollar by the banks.
“The virus outbreak is likely to cause supply-side shortages which may result in inflationary pressure as prices readjust to the forces of demand and supply,” Cytonn Investments says.
The Central Bank of Kenya (CBK) has started buying dollars worth Kshs 40.5 billion from banks which will bolster the forex reserves.