Increased growth is expected in the health and ICT sectors as the coronavirus pandemic takes root across the globe.
NCBA's COVID-19 Economic Update shows the two sectors will benefit from increased investments by both government and the private sector.
On March 25, President Uhuru Kenyatta directed that Sh1.0 billion from the Universal Health Coverage kitty be immediately appropriated strictly towards the recruitment of additional health workers to support in the management of the spread of COVID-19.
In addition, the World Bank Group board of directors has approved $50 million (Sh5.3 billion) in immediate funding to support Kenya’s response to the global COVID-19 (coronavirus) pandemic. This is under a new operation - the Kenya COVID -19 Emergency Response Project.
This coupled with the shift in business operating models, as more firms move to adopt online use to salvage already dwindling operations.
"It is no longer business as usual, our lives to a degree have changed unimaginably in just a few weeks," NCBA Group managing director John Gachora said.
He added that pro-activeness, flexibility and coordination would be crucial in lessening any pains that most sectors will have to confront in this period.
Critical sectors including tourism, hospitality, and horticulture, the country’s key foreign exchange-earners have been hit badly the spread of coronavirus, with majority of workers being sent home.
Other sectors such as retail, manufacturing and financial services have also registered a slump in operations with Kenyans and businesses cutting down spend by 50 per cent.
This has in turn seen a number of firms send home staff, on unpaid leave or to work from home to minimise spread of the disease.
According to the NCBA report, a large-scale slowdown in activity will see increased job losses in the private sector while hiring in the public sector will stagnate.
The informal sector will also see negative growth as demand weakens further with declining incomes.
“Disruptions to supply chains and containment measures including curfews and potential shutdown should further weaken job prospects as businesses’ operating capacity decline,” the report stated.
The study shows formal employment growth has a 0.52 positive correlation with GDP growth. This is diluted to 0.37 by informal jobs.
This means the projected decline in GDP growth from the 6.3 per cent forecast down to 1.9 per cent will come with no new jobs or a major dip in the employment level in both the formal and informal sectors.
“In Kenya, according to our in-house economists, over 20,000 formal jobs may be lost this year, with many more layoffs expected in the informal sector," Gachora said.
He added that initial assessment of job markets by the International Labor Association shows almost 25 million jobs may be lost globally, higher than the 22Mn increase in unemployment during the 2008-9 global financial crisis.
“Underemployment is also expected to increase as working hours and wages reduce,” he said.
