Inequality mars economic resilience

Areport released by the Financial Sector Deepening Kenya (FSD Kenya) this month shows that Kenya’s economy remains resilient compared to many of its peers despite the challenges brought by Covid-19 pandemic. Despite the positive indications, the country’s growth trajectory is still uncertain given that Covid-19 may linger up to mid-2022.

Although the Treasury expects the economy to grow by 5.2 percent in 2021, some experts predict that it will expand at least by 4.5 percent while the more optimistic ones put it at 6.1 percent. According to the FSD Kenya report, ‘State of the Economy: Focus on the Impact of Covid on Women and Education’, the repercussions of a contracting economy will be dire since the most affected areas are labour-intensive and offer formal employment.

These include tourism, education, wholesale and retail trade, as well as the manufacturing. The country therefore will experience an increase of unemployment because many people in the formal sector might lose their jobs.

Middle- and upper-income earners are likely to experience short-term resilience, according to the report. But low-income earners might not be as lucky —their income vulnerabilities could lead to “heightened social and economic insecurity including food insecurity for the poorest and most vulnerable populations.” And many of the low-income earners may end up in the micro, small and medium enterprises (MSMEs) sector.

In terms of education, we all know that Covid-19 has had its toll on the sector. In Kenya, the most affected have been on low-cost privately owned schools where many poor parents prefer to enrol their children due to a lack of space or concerns about the quality of education in public schools.

The report states that over 60 percent of education in Nairobi happens to be in the low-cost private schools which are located in informal settlements. Although the government has been trying to deny this, several other studies corroborate the findings. Research by open mapping of Kibagare, Deep Sea and Githogoro slums in Westlands revealed that out of the 282 schools in the sub-county, only 19 were public. The rest are low-cost private or informal schools.

The report explains that low-cost private schools primarily rely on fees and as a result of this, they have had no any other means of paying the teachers. This has made the majority of them to struggle to re-open.

Since 83 percent of the households that rely on the low-cost private schools for their children’s education earn less than Sh15,000, the solution therefore should be a bailout just like large corporations are being given. The collapse of these private schools and the lack of space in public schools mean that the very poor will suffer most from the pandemic. Already we are witnessing the impact of school closures on girls. They have become victims of sexual abuse and we are witnessing high cases of teenage pregnancy in the country. And with limited space they have also become a target for domestic abuse.

Women have borne the greatest brunt of the pandemic. The report highlights several issues that have affected women during the crisis. These are high cases of domestic violence, and lack of safety and home-based care of Covid patients.

What many people hardly think of is that women have far more responsibilities in every household than men. Some of these responsibilities are never monetised. Imagine if the government could monetise domestic and home-based care for Covid-19 patients, it could reveal the important role women are playing in the health care system.

Going forward, the government should consider subsidies and grants to MSMEs and entrepreneurs, and also provide credit guarantees to the low-cost schools by enhancing partnerships to build facilities in these schools. It should address child pregnancies, provide legal aid, safe houses and medical care for survivors of abuse, and provide cash transfers or food to those living under extreme conditions.