The national government should move quickly to rescue Kenyan firms that are reeling from coronavirus impact, barely two weeks since the first case was announced in the country.
It is no lie that the health crisis is fast morphing into an economic crisis. President Uhuru Kenyatta, for instance, expects the tourism sector to take hit as so will restaurant businesses and that of small traders who depend on imported goods.
This has the potential to send many firms out of business or scaling down, leading to job cuts in an economy where new jobs are not easy to come by and dependency ratios are high.
The state has announced measures to avert the spread of the disease beyond the seven confirmed cases but should now move quickly and support businesses not to close shop.
President Kenyatta’s administration should adopt policy measures that will help save firms from effects such as reduced demand for goods and services and disrupted supply chains.
While it is true governments financial muscles are not the best position now, it should relieve firms of some pressure through measures such deferring of corporate tax payments for at least a year. This should also be complemented with speedy settling of any pending bills or outstanding value-added tax refunds to support the liquidity position of companies.
Payment of resultant outstanding tax should then be staggered over time once the crisis is over.
The government should implore upon banks to defer payment of loans by corporates as well as small and medium enterprises for at least one year as has been done for households. This was explored by banks and Central Bank of Kenya but must be followed to the letter as the true cost of the crisis unfolds.
Firms, which have taken a painful decision to allow part of their staff to work from home to lower risks of spreading the virus, can be supported through taking off excise duty from airtime and data. This will help lower costs.
The government should also significantly lower power costs for manufacturers so that they produce at a lower cost and send goods to the market at reduced prices.
This will reduce fall in demand given the many households operating on tight purses.
With many Kenyans working in the informal sector, we cannot afford extreme lockdown as seen in places such as Italy.
Government has to, therefore, be careful so that it does not come out of a health crisis and sink into irreparable financial crisis.
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