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How Covid has hit incomes of Nairobi’s poor

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A section of Mathare slum in Nairobi. FILE PHOTO | NMG

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Summary

  • 92 percent of Nairobi County’s low-income residents suffer reduced incomes.
  • Among those currently earning any income at all, 96 percent said they were earning less than they were prior to the crisis.
  • In response to lower earnings, two-thirds of the respondents said they had cut back spending on food and non-alcoholic drinks.

Measures taken to combat the coronavirus pandemic have seen 92 percent of Nairobi County’s low-income residents suffer reduced incomes, forcing them to cut back on essential purchases, including food.

A survey by Tifa Research has for the first time revealed the stark reality that the economic impact of the curfew, closure of businesses like bars and travel restrictions have had on the capital’s most vulnerable populace.

The 92 percent of respondents who reported reduced income comprise those who lost their jobs, indicating serious economic hardship should the crisis persist for long. It also includes those who have found themselves underemployed or entirely unemployable as a result of the restrictions.

“In terms of the nature of such changes, its main impact has clearly been economic,” the report prepared by Tifa MD Maggie Ireri states.

Among those currently earning any income at all, 96 percent said they were earning less than they were prior to the crisis.

In response to lower earnings, two-thirds of the respondents said they had cut back spending on food and non-alcoholic drinks.

Increased hunger was reported by 28 percent of those sampled, with the report noting that food deprivation is “the most immediate impact of the virus on Nairobi’s poor” highlighting the need for the government to put in place measures to ensure food security and availability for the urban poor.

Spending on clothing has also dropped by 22 percent, transportation (19 percent), rent (18 percent) and entertainment or soclialising (nine percent).

This is part of the general reduction in consumer spending and private sector investment that is set to hurt economic growth in the short term.

The World Bank expects economic growth to drop to 1.5 percent this year, and contract one percent in the worst-case scenario under the impact of the coronavirus global pandemic that has hit Kenya’s tourism and agricultural exports the most.

Kenya has so far reported 737 positive cases of the novel coronavirus, with 40 deaths and 281 recoveries.

To stem the disease’s spread, Kenya has suspended commercial flights in and out of the country, imposed a dusk-to-dawn curfew and banned public gatherings. However, it is yet to close its borders, including with its more vulnerable neighbours in the north and south.

It has also halted movement into and out of Kenya’s five counties most affected by the virus, including Nairobi and Mombasa, including a lockdown in Eastleigh in Nairobi and Old Town in Mombasa. Those moves have led to a reduction in economic activities. The World Bank has indicated that Kenya’s economic growth could rebound to 5.2 percent in 2021 if its virus containment measures ease by the second half of this year, which is only 14 days away.

The Tifa survey shows the huge gap in meeting the needs of low-income Nairobi dwellers whose livelihoods have suffered due to restrictions imposed to slow down the spread of coronavirus. The government has announced it will disburse Sh8 billion to the most vulnerable households. The number of beneficiaries and the criteria of choosing them remains unclear although, according to the survey, some families in poor neighbourhoods have already started receiving the money. Various individuals and charities have also been donating food to the low income zones, easing their pain, but highlighting the need for more targeted interventions. The survey shows that most of the county’s residents are in need of help.

Kenya has limited welfare programmes. Inua Jamii, through which more than Sh30 billion is distributed to the elderly per year, is the most entrenched cash transfer system, targeting pensioners in both rural and urban areas.

So far, the government is yet to announced direct cash benefits to citizens who have lost their incomes due to the pandemic. Instead, it has implemented income tax cuts for those employed in the formal sector. The benefits kicked in last month but the Bretton Woods have indicated that these benefits must end as soon as the Coronavirus pandemic is brought under control.

The current health and economic crisis has hurt the ability of low income households to save for the future and forced many of them to sell assets, according to the study. Only six percent of the respondents said they can save money now while those that could save cash before the crisis represented 77 percent of those sampled.

“The nearly universal loss of income among those who had been working before the virus crisis has meant not just a reduction in savings for nearly all the individuals/households for which this had been possible in the past, but also in expenditure on what may be considered as essential items, starting with food,” say Ms Ireri and Mr Tom Wolf, who released the findings to the Business Daily yesterday.

“This also means that many households may have to resort to such survival strategies as the sale of personal items and productive assets such as land, resulting in reduced future income opportunities.”

The survey was conducted between April 25, 2020 and April 27, 2020 among dwellers of Nairobi County’s Huruma, Kibera, Mathare, Korogocho, Mukuru kwa Njenga and Kawangware settlements. All six are poor neighbourhoods.

A total of 356 people participated in the study – 187 men and 169 women aged 18 years or older. Their estimated monthly incomes ranged from zero to more than Sh50,000.

At the time of the survey, Kenya already had about 350 reported Covid-19 cases out of about 15,000 tests, about two-thirds of which were among Nairobi’s population (including international flight arrivals).

“As such, even if all respondents know about the virus, it is not surprising that hardly any of them personally know even one person who has been tested or found positive or died (among those tested),” the report says.

“However, if recently released figures are anything to go by, the numbers/percentages for all these questions are (unfortunately) likely to increase. Indeed, at the time of compiling this report Kenya (8th May) had 607 confirmed cases and 29 deaths.”

Tifa and the Business Daily will conduct further surveys to gauge the impact of prolonged curfew and travel restrictions on poor populations in the city.