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Start planning for economic revival

If it were not for the huge remittances from Kenyans in the diaspora, our forex receipts would be very low.

In Summary

• The measures announced thus far — reduced taxes, flexible working hours, etc —are all very well.

•  But they are more of what you do to address temporary economic distress.  

Economic revival
Economic revival
Image: OZONE

Sooner or later — and provided we are successful in controlling the spread of the coronavirus in Kenya — we will have to give more thought to the economic dimensions of this crisis.

The measures announced thus far — reduced taxes, flexible working hours, etc —are all very well. But they are more of what you do to address temporary economic distress.  

And yet there can be no doubt that what looms ahead is not anything temporary, but a major economic catastrophe. Specifically, for two of Kenya’s most vibrant economic success stories: Tourism and horticulture.

To provide a perspective on what lies ahead for the tourism sector, we might consider the current situation in Portugal, which is at once one of the most popular tourism destinations in Europe, and also one of the European nations that have been hardest hit by the coronavirus pandemic.

Earlier this week, the president of the Portuguese Tourism Confederation said the impact of the Covid-19 crisis on the sector has been "extremely violent", adding that he expects that "more than 90 per cent of companies" in this sector will have "zero sales" in April and May.

This is a country that has been routinely hosting about 23 million visitors each year. And now, that is all down to zero.

Well, it is much the same here, especially at the Coast: All those beach hotels that are now closing, obviously expect “zero sales” in months to come; and indeed had barely any sales at all during the past two months as well.

And at the same time, we read of major exporters of flowers having to dispose of hundreds of thousands of cut flowers since there are no longer any regular flights to the core markets in Europe and thus no way to deliver the flowers to their customers.

The significance of these two economic sectors is that they are key earners of foreign exchange. And such forex is needed if we are to be able to import those manufactured goods which we do not produce locally.

It is evidence of the successive policy failures of Kenyan governments, that we have not moved that far from the basic agrarian economy that we inherited at independence. Even as the benefits of having a more diversified economy have all along been perfectly obvious, we have continued to count coffee and tea – both of which are commodities that currently have to be sold in the face of huge global surpluses – among our top exports.

If it were not for the huge remittances from Kenyans in the diaspora, our forex receipts would be very low.

In any event, we cannot afford to lose the money traditionally brought into our economy by tourism and horticulture, any more than we can afford to have all those hundreds of thousands of Kenyans who depend on those two sectors for a living, remain jobless indefinitely.

That is why even as we continue to seek ways to limit the public health devastation of the coronavirus crisis, we simultaneously need to plan for the full restoration of horticulture exports, and tourism arrivals.

One practical idea here would be the granting of massive subsidies to Kenya Airways (which has already requested a rescue package from the government) to facilitate in turn, subsidised flights for tourists and subsidised cargo freight rates for horticulture growers.

If handled correctly, this could not only revive Kenya Airways, but also jump-start the currently stagnant tourism and horticulture sectors.

This is not an original idea.

I was once in Egypt for an official study tour, and so got to learn of how they turned the tables on the terrorists who, a few years earlier, had conducted a brazen daylight massacre of European tourists, leading to immediate and total cancellation of all new visits from its key tourism markets.

After the dust had settled, the Egyptian tourism authorities arranged for heavily subsidised flights for any visiting European tourists.

The rates were so unbelievably low that many who had never hoped to be able to see the famous pyramids close up at once took up this offer and flew out for this once in a lifetime experience.