61 p.c of businesses have seen drops due to coronavirus
A survey conducted by the Kenya Private Sector Alliance (KEPSA) has revealed that a majority of local businesses have lost up to Ksh1 million due to stock outs and delayed deliveries occasioned by the coronavirus (COVID-19) outbreak across the world.
The survey indicates the impact of the virus on Kenyan businesses ranges from very low to moderate for a majority of the businesses.
Chief Executive Officer of KEPSA, Carol Karuga says this should serve as a wake-up call for Kenya to build its in-house manufacturing capabilities for self-sufficiency.
“We need to look at local production and find ways of scaling up to feed our domestic needs. For the short term, we would like local manufacturers to supply to our internal traders. Medium-term, we are looking to collaborate with each member states. Finally long term we will develop local capacity to ensure we can produce equivalent to what we consume. This way we will build our domestic industries, grow jobs and become self-sufficient.” Said Karuga
The outbreak of coronavirus has taken a toll on the global economy, with Kenya’s economy now feeling the second-round effects of the slowdown in key economies such as China.
The recently conducted survey by KEPSA on 95 businesses drawn from the 17 sectors of the economy indicated reduced imports of crucial products including consumer and industrial products, motor vehicles, machinery, electronic equipment, appliances and accessories.
China alone accounts for about 21 percent of Kenya’s imports, an indication that at least Ksh370 billion worth of products may need to be sourced elsewhere or produced locally due to COVID-19 global attack.
The survey also shows that 61 percent of the businesses reported negative effects due to the virus, with exports to Asian countries having been slowed down due to the epidemic.
Businesses estimated losses of less than Kshs 1 million, while 21 percent reported losses of between Kshs 1 million and 5 million.
“We are advising our businesses to review their revenue expectations and targets for the year due to the uncertainty caused by the disease. This is to ensure we manage and can absorb any shocks from the disease to avoid downsizing a closure. Further, since we expect delays, we would like to see suppliers; traders and consumer review the terms and conditions of trade.” Added Karuga
No one is sure about how long the impact of the deadly virus will last, pointing to the need to cushion businesses from further impact.
KEPSA has proposed tax breaks to companies that seek to set up or expand their capacity to produce import substitutes where feasible.
The private sector lobby association further wants the government to release value added tax refunds owed to businesses to help them manage their cash flows.
National Treasury has been urged to consider a reduction of corporation tax for companies in the travel industry to 15 percent for 2020 in view of the low business volumes that players in the tourism and hospitality sector are experiencing in the wake of coronavirus nightmare.