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Ideas & Debate

An economic recovery plan needed after crisis

The National Treasury building
The National Treasury building. FILE PHOTO | NMG 

Huge credit goes to the government which has taken correct, early and proactive restrictive measures to limit speed and extent of Covid-19 spread. These actions have given the authorities a window to develop critical capacity needed to check the virus, especially as the spread moves from the city to the counties. It is evident that the Covid-19 task force has lifted and applied useful experiences from global virus hotspots, and this is a critical success factor.

Further, public communication has been regular, factual and with sufficient detail to keep Kenyans effectively informed and this has hopefully put the public at ease that although we are entering a dark tunnel, we shall get out of it sooner if we all responsibly play our defensive roles. Policy statements and actions from the top leadership have been emphatic and mostly impactful, with politics kept at a very safe distance.

It is my belief and confidence that the world and indeed Kenya will come out of the virus crisis in a few months’ time because science across the world is progressively working out solutions. And when we come out at the other end of the tunnel, Kenya should be ready to reboot the weakened economy. And for this we need a multi-sector economic task force to commence preparing a blue-print for Kenya’s economic recovery, a plan to be implemented immediately the containment of the disease is declared.

The ongoing Covid-19 restrictive measures are already impairing socio-economic systems and productive capacity, with significant reduction of incomes for the government, businesses and individuals. This is in addition to ongoing depletion of national coffers as a result of financial resources diversion to fight the virus, and also tax reductions to ease socio-economic stress.

The proposed task force should come up with plans to quickly re-stablish Treasury liquidity including budgetary prioritisation. It should also recommend structural changes to economic and governance systems advised by lessons learned from Covid-19 crisis. It may indeed be a great opportunity to re-engineer Kenya.

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As the entire world will be coming out of the virus shadows about the same time, it is unlikely that there will be much cash available from multilateral and bilateral loans and grants, and this is why we need creative ways of funding the economy. It may be necessary to renegotiate terms of our existing foreign debt, especially the infrastructure loans with China.

Further, we should be as cost-effective as possible as we roll out Covid-19 containment measures with every shilling fully accounted for. This way we shall conserve cash for the economic recovery.

It is also important that as we fight the virus, we carefully ring-fence and protect productive capacity for those economic activities that are the lifelines of our economy, and in this category I have agricultural (coffee, tea, horticultural products) and EPZ exports. Protecting these sectors whichever way, will ensure sufficient forex inflows when the global markets re-open. It is also true that the ongoing socio-economic restrictions are conserving forex due to reduced imported consumption. We need the forex to stabilise our shilling.

The war against the Covid-19 is indeed very disruptive to daily socio-economic activities and lifestyles, but it is a war we must expertly win sooner than later with the minimum possible adverse impact. It is a participatory war effort with each person playing his or her part, by simply following the protocols and restrictions set by the government, and where possible donating materials and cash, and when called upon volunteering hours of skills and expertise.

Yes, I am working from home doing my energy consultancy tasks, while my farm employees in Mathira have courteously asked me to remain in the city, promising that they will do an even better job in my absence. My 95-year-old mother at Karatina town has wished us well in the city, and excused us for not travelling to see her.

Finally, we need to be as ready as possible to reboot the economy when the virus is declared controlled.

George Wachira is the Director, Petroleum Focus Consultants; [email protected]

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