Following confirmation of the first coronavirus case in Kenya last week, the president confirmed two more cases yesterday (15 March) – both people had been in contact with the first patient. The three patients have been placed in isolation, although the extent of their contact with other people before they were discovered to have the virus remains unclear.
We expect the government to take measures to protect the economy over the next few weeks, with the president already having highlighted the need for cashless transactions to be made cheaper (see below for highlights from the president's speech). No measures have been announced yet, but the Kenya Private Sector Association (KEPSA) is planning proposals to put to the government to help support the economy during this crisis.
Areas the government could target include:
- Lowering the cost of cashless transaction channels – mobile and card;
- A potential cut to the base rate at the next Central Bank of Kenya monetary policy committee meeting, on 23 March; and
- Policies on bank lending to support businesses.
These measures would help, but we still anticipate a significant economic slowdown over the next few months, with a resultant impact on (already strained) asset quality for Kenyan banks. Coronavirus adds to the other three major risks we see for banks' asset quality: the locust swarm affecting agricultural areas, real estate prices softening and the government continuing to delay supplier payments.
President's speech
The president in his speech on 15 March outlined policies for the nation to deal with the pandemic as follows:
- To avoid the risk of transmission through physical handling of money, the government encourages the use of cashless transactions, such as mobile money and credit cards. It has appealed to mobile operators and banks to take into consideration the situation and reduce the cost of transactions during this period. Legal measures have not yet been put in place to effect this;
- The government is suspending travel for all people coming to Kenya from any country with reported coronavirus cases. Only Kenyan citizens and foreigners with valid residence permits will be allowed to enter Kenya, provided they proceed to self-quarantine or to a government-designated quarantine facility. This directive will remain in effect for the next 30 days or as changed by the National Emergency Response Committee;
- All people who have come to Kenya in the past 14 days must self-quarantine;
- Educational institutions have been closed with immediate effect, with students given until 18 March to move out of boarding schools and 20 March to move out of universities, respectively;
- Where possible, government offices, businesses and companies have been encouraged to allow employees to work from home, with the exception of employees working in critical or essential services;
- 'Social distancing' has been encouraged, with large gatherings being discouraged and the provision of sanitisers and hand washing facilities emphasized.
In our view, the country is ill prepared to deal with the pandemic, with nurses at Mbagathi Hospital, one of the three largest isolation camps in Kenya, protesting about the lack of coronavirus training and support available to protect their families from contagion.
Hospitals are struggling with adequate supplies of sanitisers, gloves and even masks, suggesting the healthcare system will come under enormous pressure if coronavirus is not contained.