The fear of an invisible enemy will hang like a dark, heavy cloud over most Kenyan families during the Christmas festivities.
It is a Christmas like no other in a year that saw more than two million Kenyans sink below the poverty line, weighed down by the Covid-19 pandemic which decimated businesses and led to job losses.
The Kenya 2020 December Holiday Retail Survey found that retailers should expect a drop for spenders of between Sh31,000 and Sh500,000.
This category dropped to seven per cent from 35 per cent in 2019.
Only two per cent of Kenyans are likely to spend Sh100,000 to Sh500,000 for Christmas, compared to 14 per cent last year.
The Viffa survey shows there was an average 22 per cent drop in income for people earning Sh50,000 to Sh500,000 as companies effected pay cuts during the pandemic.
Struggling economy
“The ripple effect of a struggling economy despite the intervention by the government through pay-as-you-earn (paye) and value added tax (VAT) relief is a net reduction in disposable income, leading to budget cuts at the household level,” the study says.
The unemployment rate increased sharply this year, approximately doubling to 10.4 per cent in the second quarter as measured by the Kenya National Bureau of Statistics.
Average weekly working hours for those still employed reduced from 50 to 38.
The rising inflation is stretching already depleted pockets further as Kenyans stare at a January in which the Covid-19 tax relief and sending money on mobile phone free for amounts below Sh1,000 come to an end.
Mounting debt
Food and beverage purchases top the list of the desired spending in the holiday season, ahead of clothes, toiletries, personal effects and electronics, despite rising prices.
A number of hotels, clubs and recreational joints that usually make a killing in this period will remain shut.
Worse still, many civil servants and county government employees will be broke during the festivities, having gone without pay for months even as the National Treasury insists that the country is not broke.
Hundreds of thousands of civil servants, including police officers and teachers, had not been paid by Monday.
Ordinarily, the December pay for civil servants comes before the 20th.
Sh8 billion for pension
Treasury Cabinet Secretary Ukur Yatani told Parliament last week that the government would suspend or postpone some salaries because it has not raised enough money.
Treasury requires about Sh50 billion every month to pay more than 530,000 government workers and another Sh8 billion for pension.
Revenue collection for the five months to November dropped by Sh100.72 billion to Sh527.7 billion.
About 68.1 per cent of the taxes, or Sh359 billion, was used to repay the country’s mounting public debt in the same period.
The situation has made the government to borrow more to meet recurrent obligations like salaries and transfers to county governments.
Kenya and the International Monetary Fund are negotiating a $2.3 billion (Sh256 billion) lending programme for budgetary support.
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