The Centre for Disease Control (CDC) in the US has issued a Level 3 travel health notice for Kenya due to Covid-19. This is a step up from June when the CDC issued a Level 2 travel health notice for Kenya, indicating a moderate level of Covid-19 in the country. Currently Kenya is undergoing its fourth wave of Covid-19 with positivity rates hovering around 15-18%.
Unlike the previous three waves when President Kenyatta responded by implementing lockdowns in the country, this time he has focused on stepping up the vaccine efforts. Kenya is now aiming to have at least 10mn adults vaccinated by December 2021 and 26mn adults vaccinated by 2022.
The number of vaccination centres in the country has increased markedly, with private hospitals and institutions beings used as vaccination spots around the country. This is a positive considering that at present, only 2.6% of the adult population has been fully vaccinated. In addition to this, according to the head of Kenya’s public service, Joseph Kinyua, all government workers are required to receive at least one dose of Covid vaccine before 23 August in an effort to accelerate vaccine uptake and resume normal operations.
Tourism sector to take a hit, asset quality to remain weak
The travel advisory from the US comes after the United Kingdom (UK) retained Kenya on its travel ban list due to the Covid-19 surge. The US and UK account for over 20% of visitors to Kenya annually, with July to September being a high season for the sector.
The latest travel advisory is a setback for Kenya's tourism sector, which had begun to show promise with the lifting of lockdowns in the country. We expect this will impact the asset quality of the tourism sector with the NPL ratio for the sector expected to remain stagnant following this travel advisory. Despite this, the impact on the overall banking sector will be muted as the tourism, restaurant and hotels segment accounts for just 3% of total loans and 4% of sector NPLs.