Investors and businesses are staring at billions of shillings in losses following the unprecedented five-day-long holiday that starts from Friday to Tuesday.
The losses will be the product of business closures in top investments like the banks, schools, courts, government offices and the Nairobi Securities Exchange (NSE) #ticker: NSE as well as the currency market.
The economy generates on average Sh25.3 billion daily and the five-day official shutdown looks set to deny workers and investors billions of shillings in earnings.
The five-day weekend comes after the government declared Tuesday a public holiday to mark Idd-ul-Fitr in addition to Monday’s Labour Day rest.
The government had also declared Friday a national holiday following the death of President Mwai Kibaki.
Analysts said the holiday in the middle of a working week comes with huge costs to the economy that is yet to fully recover from the effects of Covid-19, which triggered layoffs, pay cuts and business closures.
“Kenya cannot afford the luxury of more public holidays on a weekday,” said XN Iraki, a lecturer of economics at the University of Nairobi.
He faulted the mid-week breaks, saying they will rob the country of man-hours and slow down economic activity.
“It is very expensive, with every [formal] worker earning on average Sh2,226 a day for about half of our population. If you include the multiplier effect in the informal economy and the fact that on Thursday people will not really work and when they come back on Wednesday suffering hangover they will also be slow, then you are looking at an even bigger figure,” Mr Iraki added.
The NSE on Wednesday traded shares and bonds worth Sh4.6 billion.
The bourse’s closure on Friday, Monday and Tuesday means loss of commissions for brokers and the stock market, and of trading profits for investors.
Manufacturers say the holidays will disrupt the production process, forcing the industrialists to reschedule production and transportation of raw materials and finished goods.
Kenya Association of Manufacturers (KAM)—the industry lobby— says firms that would opt to operate will be forced to pay workers more in overtime compensation.
“There will be a cost implication for those that continue production during the public holidays. This is because, depending on a specific company’s human resource policies and existing labour laws, there has to be a mode of compensation,” said Phyllis Wakiaga, the chief executive of KAM.
Although Kenya’s banking system has gone largely digital allowing mobile banking and payments via platforms such as M-Pesa, this is mostly limited to smaller value transactions.
Larger deals that require full banking operations will be delayed as well as payments requiring clearance such as cheques and correspondence banking across borders.
Consumption will also be affected as people stay at home, cutting spending on transport, airtime and other consumer goods.
Obado Obado, the owner of a popular Nairobi restaurant Café Deli, says five days is such a long time for his outlets located in the central business district (CBD).
He said restaurants based in town expect to see nearly 70 per cent decline in sales during the period.
“For restaurants like us based in CBD we target people who work in offices and have to come to town. During holidays the best we can do is 30 per cent sales, so five days is very bad for us, it is like the Covid-19 period again,” said Mr Obado.
Matatu Owners Association (MOA) chairman Jimal Ibrahim said unlike the past when the public service vehicle operators used to switch to private business serving up-country routes, this holiday comes as a surprise and most operators will not be able to make the switch.
He said as people stay at home, matatu operators expect to cull their routes by almost 70 percent, hurting vehicle owners with loan payments who will have to do without revenues during the holiday.
The Kenyan economy has barely recovered from the ravages of the Covid-19 period when it shrank to negative 0.3 percent in 2020.
Analysts said the holiday comes with huge costs to the economy whose growth forecast for 2022 is estimated at 6.0 percent from an estimated 7.6 percent in 2021 despite the August 9 General Election.
Kenya’s economy has a history of slowing down during election years when firms put investment decisions on hold pending a return to normalcy in the political landscape.
Economic growth, for example, slowed to 4.81 percent in 2017 as a result of the bitterly contested presidential election from 5.88 percent a year earlier.
The same trend was seen in 2008 when the violence in the aftermath of the December 2007 presidential election sank economy to a growth to 0.23 percent from 6.865 percent the year before.
The notable exception was in 2013 when the economy grew 5.8 percent after the Supreme Court amicably resolved a presidential dispute compared with 4.56 percent the year before.