SOME HAVE SHUT BUSINESSES

Coronavirus pushes Mombasa traders to despair

High business rates, effects of SGR and now coronavirus are all threatening to destabilise tourism city

In Summary

• Business community grappling with effects of SGR and high taxes imposed by county government

• By last week, at least 37 ships had cancelled their voyages to Kenya due to the fear of the disease

Hassan Mohammed* (not his real name) is a depressed man. 

He is no longer the breadwinner in the family, forcing his wife to take up that role, much to the chagrin of Hassan.

“He hates that situation and his behaviour has changed because of that. I fear he might explode one day,” the worried wife said.

 
 

Hassan was a giant in the transport industry, owning 50 trucks, but the standard gauge railway changed all that. The coronavirus outbreak and increased licensing charges have compounded the family's woes.

His trucks now lie idle in a yard in Miritini. Attempts to dispose of them are futile.

“No one wants to buy trucks right now. What will you use them for? The SGR has completely shattered this business," the wife said.

Hassan's wife said she is struggling to pay the bills, which run into hundreds of thousands of shillings a month, owing to the posh estate they live in – Kizingo.

She owns boutique shops in Mombasa, but she is contemplating closing down two of them because she has not imported any cargo this year. The coronavirus has complicated things for her.

"We are counting losses since we have nothing to sell yet Mombasa county has hiked business permit charges. This is a blow to us, and we might be forced to seek alternatives to sustain our family," she said.

Kenya Ports Authority managing director Daniel Manduku said the export and import business at the port of Mombasa has largely been disrupted by Covid-19 pandemic.

 
 

By last week, at least 37 ships had cancelled their voyages to Kenya due to coronavirus fears.

 “As of now, we are having a decline in terms of the number of vessels and business has negatively been affected,” Manduku said.

He said about 40 per cent of imports coming through the Port of Mombasa are from China.

“There is a lockdown in China and that has really affected business,” he said.

While the business community in Mombasa was still reeling from the shocks of the impact of the SGR and coronavirus, Governor Hassan Joho's administration struck with increased taxes and licenses.

This has sharply increased the cost of doing business, scaring investors away.

The county raised some levies and taxes as contained in the Finance Bill 2019-20.

For instance, Mombasa increased hotel licences from Sh85,000 to Sh150,000 annually, a 70 per cent increment, depending on the size and classification of the facilities.

Casinos had their operational charges raised to Sh500,000 annually from Sh100,000, while bars with a capacity of over 60 patrons will now be paying Sh60,000, up from Sh22,500 annually.

Liquor licences for nightclubs have doubled from Sh100,000 to Sh200,000 annually and Single Business Permit fees have also shot up.

In February, the Kenya National Chamber of Commerce and Industry-Mombasa chapter (KNCCI), the Kenya Trade Network Agency (KenTrade) and the Youth Empowerment Programme Initiative (YEPI), called for dialogue between the business community, youth and the county government to strategize on how to address the situation.

KenTrade chair Suleiman Shahbal said adopting a strategy of engagement was the way to go.

“I want to have a personal discussion with the governor to explain to him the different alternatives that county governments can use,” he said.

Shahbal said it was more productive to find ways of encouraging businesses to set up shop in Mombasa than discouraging them.

He, however, said Mombasa is in a dilemma and is struggling to find a balance.

On the one hand, the government has to raise revenue to run the county and provide essential, timely and proper services to the people and, on the other, it has to provide a conducive environment for businesses.

“I don’t think the intent was to chase away businesspeople. But clearly, there needs to be a change of thinking in how we do business,” he said.

KNCCI Coast chief executive James Kitavi said at least 1,200 businesses had shut down by the end of December last year.

Last Thursday, Joho sought to alleviate the fears of investors. He said the county is responsive to the demands of the stakeholders, signalling an intention to give in to the demands of the business community for a meeting.

He told investors the county was working to create an enabling environment for doing business.

Joho last Thursday entered into a partnership with USAID in a bid to find ways of ensuring the business environment is conducive.

The partners will jointly create, implement and measure programmes to address problems at the county level.

USAID Mission Director Mark Meassick said Mombasa is a focus county under the US Government’s Prosper Africa Initiative to increase two-way trade and investment between the US and Kenya.

Joho said the partnership between the county and USAID will help them achieve county objectives.

He said he had just returned from a US trip during which he met “serious private sector players” in a bid to convince them to invest in Mombasa.

“We are going to make each of our investments work better to create more jobs and more opportunities for the people of Mombasa,” Meassick said.

The mission director said they will be looking at different sectors including health, agriculture, education and the environment.

“We think Mombasa has incredible opportunities for links with US businesses and incredible opportunities for growth as a port city, especially one that’s 800 years old,” Meassick said.

On Monday, Joho said the coronavirus pandemic will affect businesses across the globe. “We will suffer. Everyone will suffer. But we have to work hard to contain the spread of the virus, so we can slowly get back to normal,” the county chief said at the Rahamtula isolation centre at the Coast General Hospital.

However, there is light at the end of the tunnel.

The tourism sector, which is the backbone of Mombasa’s economy has also been largely affected by coronavirus following the cancellations of flights from key source markets.

Tourism Cabinet Secretary Najib Balala said Kenya has cancelled flights to and from China and the northern parts of Italy. “This is a global crisis. It is worrying us and we might experience a decrease in international arrivals in 2020,” he said.

The United States, Italy, the United Kingdom, Germany, India and China, which were top six source markets for Kenya in 2019, bringing in about 51.4 per cent of total international tourists have recorded cases of the virus.

Last year, 2,048,834 foreign visitors arrived in Kenya, compared to 2,025,206 international arrivals in 2018.

Balala said if the coronavirus problem persists for several months, the numbers recorded in 2020 could be lower than those in 2019. “We are optimistic that the situation will be controlled and things will turn out better,” he said.

China is getting the virus under control and stores are reopening, according to the international press.

Apple, one of the leading tech companies in the world, has reopened all its 42 stores in China after a month of closure due to the virus.

This is good news for businesses in Kenya.

Being Kenya’s single largest source market, China is key to the country’s economy. A fifth of the country’s total annual imports are from China.

In 2019, China accounted for 20.3 per cent (about Sh324.9 billion) of the Sh1.6 trillion import revenue.

On Tuesday, while announcing the fourth confirmed case of coronavirus in the country, Health CS Mutahi Kagwe said they will allow cargo into the country.

However, he said the cargo, whether by ship or air, must be disinfected and the crew members quarantined before the cargo is received into the Kenya market.

Edited by A. Ndung'u