Financial experts have raised concerns over the widespread impact of the Corona Virus impact.
The planet is now interconnected. Anything that occurs in another part of the world affects us everywhere we are.
You would have been performing your everyday undertakings much like me, caring less of the financial effects of the corona virus on our companies and personal lives before it arrived in our nations.
We are all all affected, from Small and Medium Enterprises (SMEs) to Giant Corporations. Yet a silver lining exists in any dark cloud.
Western Europe, the United States and East Asia .Yet with countries like South Africa, Ethiopia, Algeria, Burkina Faso and others recording dramatic increases in reported incidents, it’s only a matter of time before the consequences of this pandemic are felt in full force throughout the continent.
However, Corona virus would trigger not only a health problem but an financial one. Countries who are further down the pandemic curve are now facing major financial implications.
This poses the issue of how COVID-19 can affect the financial institutions of Africa, and how African governments will plan and respond.
The Kenyan government is shielding much of the low earners from this pandemic’s biting financial strains. At the end of this situation, a feeling of despair sets in. A relentless surge in fresh financial constraints that throws several businesses into turmoil.
The reported recoveries are a confirmation that as deadly as it is, the virus is manageable to a larger percentage. History shows that even the 1918 influenza pandemic only killed 1 to 2 % of the people who were infected.
Though different, the World Health Organisation (WHO) says the figures may jump but for now, it is arguable that there exists a similarity in the disease presentation. That is, they both cause respiratory disease, which presents a wide range of illnesses from asymptomatic or mild through to severe disease or death.
WHO gives us the illusion that we are indeed in the first symmetrical section of the bell curve. Slowly reaching the top, it’ll be consolation for us, since we’re about to bore the outbreak’s brunt.
Lessons From 2008 Recession
The 2008 global financial crisis provides some sense of the potential turbulence heading Kenya’s way. Similarly to COVID-19, this crisis originated elsewhere. But due to reduced demand, countries reliant of oil and other natural resources saw their exports drastically reduced.
GDP growth in countries South of the Sahara more than halved from 2008 to just 2.5% in 2009. For many countries, this level of growth is not sufficient to compensate for high birth rates. CBK Governor has predicted a 3.6% growth in our GDP down from the original projected 6.2%.
The 2008 financial crisis also had other adverse financial effects. Remittances stagnated in 2009 having risen each year since 2003. Tourists numbers dropped from 35 to 33 million and took years to return to prior growth numbers. And the amount of development assistance effectively stagnated.
In this outbreak, a similar scenario is likely to play out again. It is dependent on the pace at which we reach the top of the curve. Once there to start the graph’s second symmetrical phase sets in.
It’s not hard to see how Kenya will profit from this. To increase the country’s financial capacity, the same degree of national attention should be directed on critical issues. For example, climate change, racism, poverty or industrial violence.
More important still, the newfound admiration for the efficient and effective style of governance. This is a vindication of those citizens who have advocated a better country. In addition,a financial planning policy based around stable structures and a larger common good . More so instead of unending political rhetoric and unrestrained markets.
This is certainly the goal to alleviate the immense economic distress and personal misery of COVID-19. However politicians will also begin to talk of how to secure and stabilize the future