Kenya: Coronavirus Vaccine News Gives Kenya Hope of Economic Recovery

Health workers take samples for Covid-19 tests (file photo).

Kenyan businesses are optimistic of an economic rebound amid expectations of a Covid-19 vaccine and after the schools reopened in January. These have increased consumption along the value chain, and boosted activity in the education sector and other supporting sectors such as transport, retail trade and financial services.

A market perception survey carried out by the Central Bank of Kenya in January shows that most businesses are confident of a return to normalcy for most economic activities.

"Additionally, 70 percent of respondents pointed out that the decline in Covid-19 infections and expectations of vaccine would improve business confidence and boost economic activity," said the survey.

The Market Perception Survey was conducted in the first three weeks of January, targeting chief executives and other senior officers of 316 private sector firms comprising 38 commercial banks, one mortgage finance institution, 14 microfinance banks and 263 non-bank private firms through questionnaires sent in hard copy and email.

According to the survey, 42 percent of the respondents expect resumption of businesses that had stalled during the pandemic while 42 percent expect a pick up following the festive season.

"With regard to tourism and agriculture 40 percent of respondents expect activity to increase as a result of eased movement and travel restrictions and favourable weather conditions respectively," the survey indicated.

According to the survey, most businesses expect to recruit more workers this year compared with 2020, largely due to strong business prospects following easing of Covid-19 containment measures, improved market optimism, expected increase in government spending on development infrastructure and expected increase in economic activities. Some companies expect to leverage on Information and Communication Technology and therefore maintain the current staffing levels.

According to the survey, economic growth expectations varied across banks and non-bank private sector firms, all of which expect a lower growth in 2020 relative to 2019 largely due to the impact of the Covid-19 pandemic and the containment measures. However, businesses expect economic growth to rebound this year, with recovery expected across all the sectors and pegged to the Covid-19 vaccine, which they expect to be widely available by June this year.

According to the survey, respondents cited favourable weather, rebound of the global economy, improved business sentiments in the domestic economy, increased credit to the private sector and reopening of schools as reasons for the expected increase in growth. Respondents expect growth to remain below the pre-Covid-19 levels due to the lingering effects of the pandemic locally and globally, slow recovery of sectors such as tourism due to slow roll-out of the vaccines and political noise.

According to the survey bank respondents revised upwards their optimism in economic prospects citing the vaccine roll-out abroad and Government's continued commitment to manage the virus situation in the country including ordering vaccine, implementation of the budget for the 2020/2021 fiscal year including the Economic Stimulus Program and other programs to youth and vulnerable groups and the favourable weather conditions supporting improved agricultural production.

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