This archive report was first published on 6 May 2020.
Kenya's Big 4 Agenda is set to be sacrificed as the government channels more resources towards curbing the spread of the coronavirus, according to a new report published on May 6, 2020.
Agusto & Co. Limited, a credit rating agency, has warned that the COVID-19 pandemic and attendant lockdown will have a devastating impact on the country's economy, with Gross Domestic Product growth expected to fall below 2 percent if the pandemic and lockdown persist beyond the second quarter.
The report highlights that various sectors, including agriculture, manufacturing, tourism, and financial services, will experience high levels of disruption, with ICT experiencing the least.
Exports of agriculture products are expected to be challenged, leading to mass layoffs within the sector, as farms struggle to service their loans due to limited capacity.
However, the report notes that disrupted local harvests in major European, Middle Eastern, and Asian markets may drive up demand for fruit and vegetables, but this will be challenged by limited outbound air freights due to the government's restriction on travels.
In manufacturing, the firm expects demand for essential and pharmaceutical goods to surge, but warns that the real impact of COVID-19 on manufacturers of essential and pharmaceutical goods will be felt from the second half of the year as household and business income and spending starts declining.
The banking and financial services sector is also expected to witness a tepid performance in 2020, with projected falls in earnings, particularly among vulnerable SMEs who will struggle to service existing loans.
The report also expects the Kenyan Shilling to depreciate by around a 10 percent range to the dollar and hover between Sh103 to Sh109 for the rest of 2020.
Commenting on the findings, Agusto & Co. Limited's country manager, Ikechukwu Iheagwam, emphasized the need for stimulus packages both domestically and internationally to cushion the adverse impact of the slow growth on businesses.
