NOT CUSHIONED

Expert comment: Uhuru plan left out bigger, poorer population

Economist says President's measures target the formal side of the economy

In Summary

• Government had not taken any measure to mitigate this crisis before it got to the country but at least now we have some proposals on how to contain it. 

• Informal sectors, even if we overcome coronavirus, will still need to be nudged forward. 

Economist Tony Watima.
INFORMAL SECTOR EXPOSED: Economist Tony Watima.
Image: COURTESY

The measures announced by President Uhuru Kenyatta are a starting point, but they are not adequate.

The government had not taken any measure to mitigate this crisis before it got to the country but at least now we have some proposals on how to contain it.

If you look at those measures, most of them target the formal side of the economy - for instance, the reduction of the Pay As You Earn and corporate taxes. The only measure that cuts across both formal and informal sectors is VAT reduction because it has a ripple effect on everyone.

The biggest problem we have in our economy is that we have a much bigger informal sector and those are the people who will be heavily hit in case of a partial or total lockdown.

This is because business activities will not be as they used to be. The small scale traders have not been cushioned in the measures to contain the spread of coronavirus.

We are not seeing a bigger plan for the economy that addresses critical sectors that have been hit badly like tourism, hospitality and horticulture.

We haven’t seen how the government intends to help them despite their contribution to the economy.

These are sectors that even if we overcome coronavirus, will still need to be nudged forward. 

Horticulture, for example, has said they will lay off 80 per cent of their workforce. 

Unless the government intervenes in specific sectors that are hard-hit, we can't say it has adequately responded. Coming to the common man, Kenyatta should reduce or scrap fuel levies if Kenyans are to adhere to the measures that have interfered with their money-making ventures.

If that is done, bus fare, kerosene and the price of many other products will go down.

 

The Economist spoke to the Star on phone