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Devolution In Kenya- The Gains, Challenges, Opportunities And Emerging Issues.

OPINION ARTICLE
BY ELIUD OWALO

Devolution is the decentralization, transfer or delegation of power from a higher to a lower level, especially by central government to local or regional administration. Devolution was at the core of the formation of the Constitution of Kenya Review Commission (CKRC) between 2000 – 2004. The Constitution of Kenya Review Act 2000 required the CKRC to consider people’s participation through the devolution of power, respect for ethnic and regional diversity and communal rights including the right of communities to organize and participate in cultural activities and the expression of their identities. The feeling of being marginalized and neglected, deprived of resources and victimized for political and or ethnic affiliations intensified the push for devolution. There was at that point particular resentment of the Provincial Administration, which was then accused of abuse of powers bestowed upon its officers, while the local authorities were considered to have failed to deliver services but had instead been turned into dens of corruption.

The CKRC detailed proposals for devolution, but however, did not propose structures right down to village level, which were later discussed by delegates at the Bomas of Kenya with input from a Committee of Experts that finally delivered a new Constitution, articulating a devolved-system of Government entailing a National Government and 47 County Governments. Subsequently, the Constitution of Kenya, 2010 as enshrined in Chapter 11 of the Constitution and spelt out in the County Governments Act, 2012 created a decentralized system of government wherein two of the three arms of government; namely the Legislature and the Executive are devolved to the 47 Political and Administrative Units provided for under Article 6 and specified in the First Schedule. The Devolution Chapter of the Constitution established the Intergovernmental Relations Act, 2013, which created key structures, namely a National and County Governments’ Coordinating Summit to help in the regulation and guidance of the relationship and co-existence of the two levels of government to facilitate success of devolution. The Constitution also created the Transition to Devolved Governments Act, 2012 which established the Transition Authority (TA) with the mandate of facilitating and coordinating the transition to the devolved system of government.

Devolution is therefore a key pillar of the Constitution of Kenya by seeking to bring governance closer to the people, with county governments being at the center of dispersing political power and economic resources to Kenyans at the grassroots. The Principles that underpin devolution in the country are that County governments established under the Constitution shall be based on democratic principles and the separation of powers; have reliable sources of revenue to enable them govern and deliver services effectively; and ensure no more than two-thirds of the members of representative bodies in each county government shall be of the same gender.

The primary objective of decentralization is to devolve power, resources and representation down to the local level. Specifically, the objects of devolution of government in Kenya were to promote democratic and accountable exercise of power; foster national unity by recognizing diversity; give powers of self-governance to the people and enhance the participation of the people in the exercise of the powers of the State and in making decisions affecting them; and recognize the right of communities to manage their own affairs and further their development;

Other pertinent intentions were to protect and promote the interests and rights of minorities and marginalized communities; promote social and economic development and the provision of proximate, easily accessible services throughout the Country; ensure equitable sharing of national and local resources throughout the Country; facilitate the decentralization of State organs, their functions and services, from the capital; and enhance checks and balances and the separation of powers. To this end, various laws have been enacted by Parliament to create strategies for the implementation framework and the adoption on which the objectives of devolution can be realized..

The Constitution in the Fourth Schedule assigns functions between the National and County governments. The functions of National Government include Foreign affairs; use of international waters and water resources; immigration and citizenship; Language; agriculture; tourism; monetary; veterinary; energy, health and education policies; national defense; police service; courts; primary schools; transport and communications; and national public work, among others. On the other hand, the functions of county governments include agriculture; health services (excluding national referral hospitals); pollution control; cultural activities; animal control and welfare; trade development and regulation; county planning and development; and pre-primary education, among others.

It is my well-considered opinion that devolution has presented a major transformation of the state and undoubtedly reversed the system of centralized control and authority established by the colonial powers. It now opens the prospects of fundamental and progressive changes in both our politics and the economy. Through devolution, County Governments now not only have the mandate and budgetary provisions to deliver services relevant to the local population but are also required by Law to involve the people in the planning process. So far, we have witnessed County-driven infrastructural development through tarmacking of roads; development of markets; provision of water for both irrigation and domestic use; provision of agricultural and extension services; facilitation of early child development(ECD); enhancement of access to health care; creation of investments and trading blocs; promotion of leadership’ accountability in the utilization of funds; increased public-participation in the prioritization of key projects; and better access to information on both policy and operational issues.

However, fundamental challenges have continued to dog the Counties including irregular or delayed disbursement of devolved funds from the national Exchequer; low revenue collection levels from local sources; weak and uncoordinated planning and execution; stalled projects; inadequate financial resources; corruption; misallocation of the available financial resources; over-indebtedness including bank overdrafts negotiated to off-set wages and salaries; huge pending bills; bloated workforce; tribalism, nepotism and clannism in the employment and deployment of workers; persistent political wrangling and infighting; inadequate capacity at the county level to effectively and efficiently perform the devolved functions; instances of duplicity of effort at both the national and county levels; and utilization of budgetary allocations on non-core activities in contravention of the Public Finance Management Act. However, there are opportunities for Foreign Direct Investment (FDI) and capital inflow; Public-Private Partnerships (PPP); Grants; exchange programmes; and wider markets for local products, that the Counties need to explore and pursue.

Emerging issues within the Counties include the need for better planning; strengthened performance management framework; improvement in quality of County leadership; prioritization of investment in thematic areas based on comparative advantage; strengthened public participation in project identification, planning and execution; intensified financial resource-mobilization; improved governance framework to facilitate prudent utilization of resources and enforce accountability at all levels; rationalization of staffing levels; optimization of the wage-bill; institutional capacity building; determination of relevant training needs and corresponding staff training; eradication of duplicity of effort; massive sensitization of both leaders and the citizens on relevant pieces of legislation supporting devolution; massive Culture and Attitudinal change programmes; strengthening of the monitoring, evaluation and reporting framework; enhanced strategic alliances and partnerships; effective management of resistance to change; and benchmarking with best-case examples globally. My humble submission is that unless and until the afforestated strategic issues are adequately addressed, it would remain insurmountable for the devolved system of government in Kenya to facilitate prudent, efficient and effective delivery of services to the citizenry at the grassroots. This is my hypothesis.

The Writer is a Management Consultant

Why The Digital Identity Is Imperative For Kenya’s Digital Transformation

By Eliud Owalo

Why The Digital Identity Is Imperative For Kenya’s Digital Transformation

Self-identification in Africa has sometimes been oppressive and humiliating. But it has also often fallen short of the intended purposes, making it ineffective. A new digital identity is a must, in the emerging global order. The old way of doing things is dying. Those who do not change with the rest of the world must accept to become irrelevant. National identification belongs here.

The origins of the Kenya personal national identification is traced back to colonial-times. An ordinance signed by Sir Henry Conway, the Colonial Governor in 1912–1917 made it mandatory for all adult males aged 16 and above to have official identity documents. Identification was largely for the purposes of controlling the movement of natives. It also facilitated payment of hut tax and recruitment into colonial labour. They were issued with a registration document that was carried in a metallic container, attached to a chain and was worn around the neck at all times. This colonial ID, referred to as kipande, was designed to be a tool of exploitation. Africans hated it. They saw it as a symbol of oppression and imposed servitude.

But if our great grandparents were overburdened and condemned to wearing the demeaning kipande around their necks, there has been little improvement. Consider this: despite quantum leaps in technology, an adult Kenyan carries an even greater burden of identification than their forefathers did. Our forefathers only carried a single kipande. Today we variously carry up to twenty-five different forms of identification, to prove that we are whom we claim to be.

Almost every new critical service requires a new set of data from us, leading to issuance of an additional special purpose ID. For example, the Inua Jamii program was introduced in 2004. It came with a new bank ID and a new token, to enable beneficiaries access their benefits. Anticipated future services portend a rise in the number of IDs per individual. Our ID items today include a national ID card, NSSF and NHIF cards, employers’ ID, passport, birth certificate, marriage certificate, driver’s license, academic certificates, health insurance card, bank card, disability card, birth certificate, passport photo, among others. In many cases you are required to carry them in triplicate copies, each certified by an advocate, or notary public.

You often also require witnesses, or a sworn affidavits, as an additional layer of verification. Woe unto you should you lose any of these documents. You will begin the recovery process by re-authenticating yourself, possibly by visiting your local sub-chief for a letter of introduction, a police station for a police abstract and finally, a Huduma center, or some other government office, to complete forms in a prescribed manner. You then wait for up to 14 days, or more, for the re-production and replacement of the physical document.

Despite efforts to identify ourselves using the national ID as we know it, the exercise is not full proof. A 2021 report by the credit rating agency TransUnion shows that Kenyan banks are losing to fraudsters over Ksh.13 billion ($121.49 million) every year, through identity theft and loan stacking. It is also estimated that up to 47% of Kenyans using mobile money have reportedly lost funds through identity theft and other forms of related fraud.The country is also an unwilling host to hundreds of thousands of illegal immigrants with forged paper identification that gives them access to our resources at the expense of deserving citizens. The public service also has to cope with growing cases of ghost workers, because of inadequacies in authentication. Apart from ghost workers, ghost beneficiaries of social security benefits, insurance fraud, exam cheats and forged academic certificates are all outcomes of authentication failures that bring to question the aptness of our current analogue IDs.

The analogue ID increasingly risks losing trust. With a myriad photo and document manipulation applications readily available in the market, ID manipulation and editing is rampant. This is worrisome in an increasingly sophisticated digital economy where MPESA alone digitally moved Ksh.29.6 trillion in 2021/22 (8 times Kenya’s national budget) and in the process undertaking billions of ID authentications in an eco-system where there is a manifold increase in financial crimes and ID thefts.

Under these circumstances, an ID that is read and interpreted by the naked eye and authenticated via human judgement across hundreds of thousands of agents, is increasingly open to human error, abuse, fraud or manipulation. It is, therefore, insufficient as a trusted source of authentication. The diminishing trust level in the current analogue ID can be attributed to the fact that when it was ideated in 1900s, it was for a different purpose, operating in a different eco-system. It was never designed to be a transactional enabler operating in the new digital space that we occupy today.

In my estimation, the current pace of technological advancement and the advent of the Fourth Industrial Revolution, now automating and digitalizing every conceivable service and process, will render analogue paper IDs obsolete by 2030. Apart from the natural attrition that the analogue ID faces in the new digital world order, the role of a national identification system has also changed significantly, almost beyond recognition. Countries are, accordingly preparing for the consequences of this rapidly approaching digital revolution.

Of course the modern-day ID is totally different from the colonial ID and its immediate derivatives. Whereas the colonial ID contained basic foundational data to inform the colonial government of your exploitative utility value, a modern-day ID is a point of convergence between the citizen as a rights holder and the government as a duty bearer. It is also the citizen’s source of authentication to various stakeholders in the world at large. It is what identifies, profiles and defines the citizen to the world.

Through its linkages, the ID provides data about the citizen’s rights, entitlements, obligations and even credit-worthiness. According to the World Bank, it is also a crucial tool for achieving sustainable development, including bankers’ twin goals of ending extreme poverty and boosting shared prosperity. For this reason, ensuring that everyone has access to identification is the explicit objective of Sustainable Development Goal (SDGs) Target 16.9—to “provide legal identity for all, including birth registration” by 2030. It plays a central role in individual rights and access to basic services and entitlements in the physical and digital worlds.

The modern day ID must be a functional official identification system provided by governments and recognized and trusted by all stakeholders with whom the citizen interacts. It is ideally going to be a platform that gives proof of identity and digital authentication services capable of meeting customer due diligence (CDD) requirements in new models where some government services are also outsourced to private sector entities.

With Kenya now digitalizing all Government services by mid-2023 and almost every financial service and business process being digitalized, you will require to be authenticated remotely for services virtually everywhere – in government and outside. The physical paper or plastic IDs are going to be increasingly irrelevant.

A modern-day ID will create a virtual digital persona. Whereas the citizen’s foundational data remains the same, the functional aspects of the ID, which forms part of their digital persona, is not static. It recognizes their changing status, resulting from different stages of their life cycle. A modern ID will be the equivalent of a social curriculum vitae. It will be continuously updated to capture your changing progressive life events and statuses, like acquisition of drivers’ license, marriage, new qualifications, etc.

Kenyans will not need to carry around over 25 different ID documents to prove their identity in 2023. But it is not Kenyans alone. The Fourth Industrial Revolution (4IR) is a real global disrupter. The digital technology is reordering everything. We are entering the age of big data and connectivity, artificial intelligence, cryptography, blockchain technologies, biometrics, database technologies, cloud computing, analytics, human-machine interaction, and improvements in robotics. You only need to have a single digital ID that points to all this information, virtually and accessible by authorized persons even without your physical presence.

So how do we align our identification system to the new digital reality? The solution lies in collapsing all available authenticated foundational ID data about the individual into a single digital ID that provides biometric authentication. In our context, a digital ID is the body of verified information about an individual as defined in the Kenya Registration of Persons Act (foundational ID data) often arising from the Integrated Population Registry Service (IPRS), National Integrated Identity Management System (NIIMS) and the National Registration Bureau (NRB) and digitally linked to aggregated data from various official and trusted sources (functional ID data) such as the National Hospital Insurance Fund (NHIF), National Social Security Fund (NSSF) and the National Education Management Information System (NEMIS) among other trusted sources of information.

It will also be linked to the birth-to-death UPI, enabling a cradle to grave overview of the citizen. Equally, it will contain the individual’s embedded biometric data that is used to associate them with the data for the purposes of authentication. This would de-duplicated, cleaned up and integrated into a single digital source of truth. All government-held data about Kenyans will be linked to the digital identity, and all public services will be available through digital channels from one single source of truth.

What would all this mean? It means that all your authenticated foundational ID data is stored in a single, secure location digitally. Instead of you producing a physical ID, it is the service provider, or other interested party, who checks your data online (or in cases offline) upon your authorization and upon authentication, provides requisite services. Your authorization entails providing your biometric data (finger print, iris, voice etc.) to be compared with that stored and embedded in your online ID data from the single source of truth.

A biometric match between your physical and stored biometrics authenticates you in a foolproof manner, based on the principle that your biometrics are unique to you and cannot be misrepresented, or impersonated. This foundational data is then linked to functional ID data e.g., NHIF, NSSF, NEMIS, KRA, NTSA, KNQA, CRBand the CRS (the Civil Registration Services) and is continually updated. The effect is that when you want to open a bank account, the bank will not necessarily require you to produce a physical ID. They will authenticate you via your biometrics and get all the pertinent information from the single source of truth and proceed to serve you, including when you apply for a loan, or wish to withdraw funds, thereby avoiding the risk of a fraudulent impersonator presenting a fake or photo-altered ID. This automated process will also be used to authenticate you to medical service providers and link you to your medical records seamlessly, without the need for a medical card or a hospital card with your medical history. The digital ID will also be key in authenticating citizens to access the over 5,000 Government services, currently being digitalized. The various Government agencies will be able to efficiently provide services to the correct persons without imposters, or fraudsters, coming in between as those requesting services will be authenticated online via their biometrics which are largely foolproof.

This aggregated data pooled together in one location will also provide useful and organized information to help the nation in development planning. Data stored digitally, in the correct format and in one location can provide useful insights if applied to various statistical analysis tools to inform development needs segmentation and profiling. It also promotes inclusivity. When well-designed, digital ID not only enables civic and social empowerment, but also makes possible real and inclusive economic gains.

Research by the McKinsey Global Institute (MGI) indicates that digital ID can create economic value for countries, primarily by enabling greater formalization of economic flows, promoting higher inclusion of individuals in a range of services, and allowing incremental digitization of sensitive interactions that require high levels of trust. An MGI analysis of Brazil, China, Ethiopia, India, Nigeria, the United Kingdom, and the United States indicates that individual countries could unlock economic value equivalent to between 3 and 13 percent of GDP by 2030 from the implementation of digital ID programs.

The four largest contributors to direct economic value for individuals globally are increased use of financial services, improved access to employment, increased agricultural productivity, and time savings. The five largest sources of value for institutions in both government and the private sector as a benefit of operationalizing the digital ID are cost savings, reduced fraud, increased sales of goods and services, improved labor productivity, and higher tax revenue. Civil and population registers are a critical administrative source of demographics and vital statistics, which in turn provide essential evidence to support the ability of governments and the private sector to engage in long-term planning and policy making in areas such as public health and infrastructure. For example, civil registration with inputs from the health sector enables policymakers to monitor cause of death and maternal and infant mortality rates and to rapidly respond to epidemics e.g., the Corona Virus, HIV/AIDS and non-communicable diseases. It is also envisaged that a digital ID system would enhance good governance by reducing incidences of ghost workers and enhancing public savings.

The digital ID is also significant in creating the ability to confirm and authenticate citizenship and its derived rights and entitlements by ensuring a biometric linkage between parents and their offspring at birth, as is the practice in countries that have adopted digital IDs like Pakistan, where the National Database & Registration Authority (NADRA) uses relational databases that allows all data points to be tied to each other in pre-defined relationships. This means that illegal immigrants would find it difficult to just gain fraudulent citizenship without having being tied to a citizen at birth. Linkages can also be created in relationships through marriage, by relating spouses’ biometrics. Illegal immigration is a great security risk to any country, and also a strain to limited resources.

The digital ID will also be a great enabler of e-Commerce. It will help create digital trust by facilitating the authentication of an actor’s identity in e-commerce, through a connection between the identity attributes in the digital world and the real-world legal identity. E-commerce activities depend on digital trust to process transactions. Lack of a verifiable digital identity will preclude participation in these systems. The pre-requisite for e-Commerce transactions is the establishment of a digital trust relationship between a vendor and a buyer, so that both parties know who they are transacting with. The private sector – including e-commerce platforms, digital banking, payment processing, and logistics – provides key services that enable e-commerce and enhance digital trust. The success of e-commerce depends on digital trust, built through verification and authentication processes, especially during merchant and customer registrations and payments, as well as through rating systems. Strong digital trust generates a sense of security in a transaction—key to any e-commerce activity.

Given the fundamental need for secure and accurate online identification and authentication, digital ID and other trust services, such as e-signatures form part of the core foundation, or a “stack” needed for successful digital economies. When enabled by digital infrastructure that brings people and organizations online, digital ID and trust services can be leveraged by government and commercial platforms to facilitate a variety of digital transactions, including digital payments. Together, digital ID and payments platforms provide the means to move towards a cashless society, creating productivity gains, reducing corruption and fraud, and further improving user convenience.

Transition from the analogue to the digital ID is key in Kenya’s digital transformation agenda because it carries our citizens along with us in this journey whose time has come. Digitalization of our systems, processes, services and re-engineering how we do business will be incomplete unless the citizens can participate digitally. As indicated above, the benefits are manifold. It is estimated that this transformation has the potential to unlock economic value equivalent to between 3 and 13 percent of GDP by 2030 from the implementation of digital ID programs.

Digital ID can promote increased and more inclusive access to education, healthcare, and labor markets. It can aid safe migration and also contribute to greater levels of civic participation. For example, in Estonia, over 30 percent of individuals vote online, of whom 20 percent say they would not vote at a physical polling place. The envisaged benefits are immense. Digital ID is indeed paramount to increasing the adoption of formal financial services and identifying specific policy interventions. Implementation and usage of digital ID is therefore critical as an enabler for financial inclusion.

Finally, the concept of a digital ID is different from Kenya’s previously proposed Huduma Number that issued a physical ID card. There is no physical ID card associated with the digital ID. It will, instead, be an instrument for enabling citizens to be part of the new digital transformation in the world. The Digital ID unlike the Huduma Number is a dynamic social vitae, and tool for realizing citizens’ rights, enabling social and financial inclusion and carrying our citizenry along with us, on the journey of Kenya’s digital transformation. The digital ID will be very instrumental in helping us to remain socially, economically and technologically relevant in the new world order. It has been utilized effectively in India, Pakistan, Estonia, Belgium and many other parts of the world. Kenya as a country cannot be left behind in the new world order. This is my take.

Eliud Owalo is the Cabinet Secretary for Information, Communication and the Digital Economy.

Let’s Prepare For The Looming Recession

Opinion Articles
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OPINION ARTICLE

BY ELIUD OWALO

The adverse effects of the Covid-19 pandemic will definitely lead to a period of economic recession in the country. Kenya will witness a period of significant decline in the level of economic activity spread across all sectors of the economy, characterized by a decline in the gross domestic product (GDP) for a period of about two consecutive quarters. The implication is that the market value of all goods and services produced within the country during this period of time will be drastically diminished. We should therefore anticipate a period of contraction in the economy. Should this situation persist for a longer period, then the economy will regrettably move into a worse state of depression.

Ordinarily, the economic cycle in the country fluctuates between periods of expansion (growth) and contraction (recession). During recession, the gross domestic product (GDP) declines; interest rates rise; unemployment levels rise; income and consumer spending levels diminish; while investment levels stagnate due to a reduction in the level of disposable incomes and savings. It is anticipated that during the period of recession, the Government will intervene in the economy through either Fiscal or Monetary policies to manage and reverse the downward course and effects of the economic cycle. The Government could deploy a Fiscal policy by adjusting its spending levels (public expenditure) and tax rates (taxation) to influence the level of economic activity in the country. Conversely, the Government can utilize monetary policy through which the Central Bank influences the amount of money in supply or circulation in the economy. Monetary policy ordinarily either increases liquidity levels in the economy to create economic growth, or reduces liquidity levels through a credit squeeze to prevent inflation.

My humble submission is that during the period of recession, the Government should deploy an expansionary fiscal policy that entails reduction in taxation levels and increase in the level of public expenditure to boost production; maximize sustainable employment; maintain price stability; and moderate long-term interest rates, all of which are important factors for the health of the economy.Alternatively,the Government can also employ an expansionary monetary policy where the Central Bank lowers interest rates to increase access to credit; boost liquidity levels in the economy; and enhance spending and investment levels.

Just like any other policy document, our Budget Policy Statement (BPS) is formulated taking into account the obtaining environment. The Corona virus is a fundamental risk to the full realization of the policies spelt out in the BPS.The global, regional and local environment upon which the BPS assumptions were based has drastically changed due to the pandemic. Kenya’s projected growth rate will therefore reduce, and we should correspondingly review the priorities outlined in the BPS to take into account necessary mitigating measures required for an economic stimulus program. This therefore calls for adjustments in the ceiling provided for various sectors and Government Ministries, Departments and Agencies to channel more resources to sectors that drive production, trade and commerce. Given that revenue generation will be affected, we must adjust the revenue and expenditure projections factored in the BPS and institute remedial action. For a start, various levels of government should revise their budgets to cut down on non-essential spending and redirect expenditure to stabilization of the economy against the backdrop of an anticipated economic downturn.

Equally, we should anticipate a combination of supply, demand and financial markets shocks. It is necessary to strike a delicate balance in addressing these shocks. First, the manufacturing and services sectors must immediately be supported to ensure that, as much as possible, production and supply of goods and services does not grind to a halt in the wake of the measures put in place to address the pandemic. Measures such as social distancing, partial lockdowns and bans on international travel have had adverse effects on the supply side of the economy. On the demand side, the population is already feeling the effects of reduced disposable incomes. We must adopt bold and innovative ways of addressing this by striking a balance between the revenue to be collected by the Government and the disposable incomes of the people. Measures such as reduction in levels of income tax and VAT which have already been introduced is commendable. On the markets, we should urgently implement desirable measures to calm the stock market and manage debt. It is notable that the BPS had already proposed expenditure rationalization and revenue enhancement measures to manage the fiscal deficit. This should now be expanded and deepened further in the wake of the COVID-19 pandemic. The timing of these proposals is also critical for the economy and should form an integral part of the economic revitalization strategy.

Suprisingly,our BPS is till anchored on the Government’s ‘Big Four’ Agenda focusing on Affordable Housing, Universal Healthcare, Food Security and Manufacturing. One anomaly however is that the BPS has not provided an implementation review of the Agenda. However, on a cursory look at economic performance indicators, my view is that the Government is far from realizing its targets on all the Four Pillars, with Manufacturing and Affordable Housing as the biggest laggards. This is where we should now be bold and propose a radical review of the Agenda. Our main focus now must be on the Universal Healthcare, Food Security and Manufacturing pillars. The former two will help in cushioning the population while the latter will help in mitigating the supply shocks to the economy. The Housing Agenda may be desirable but not a priority in the prevailing circumstances. My humble submission therefore is that the Government should be bold enough and adopt a ‘Big Three’ Agenda moving forward to enable the country focus efforts on addressing effects of the COVID-19 pandemic.

Eliud Owalo is a Management Consultant specializing in Strategy’ formulation, implementation and control.

Let Us Cushion Kenyans From The Economic Effects Of Corona Virus

OPINION ARTICLE: BY ELIUD OWALO

Our beloved country Kenya is in the grip of multiple socio-economic crises of unprecedented proportions. Never since Independence have we had to juggle between such concurrent and parallel critical threats to our well-being as a nation, all coming together amidst extremely challenging economic times. Currently our Health, Wealth and Well-Being as a Nation are under critical threat by the corona virus pandemic. This comes at a time when we are yet to resolve yet another significant threat to our food security, the desert locust invasion.

The Government of Kenya should be lauded for the efforts it has made thus far in responding to the corona virus. Commendable mitigation measures initiated so far include: restricting entry into the country to Kenyan citizens and residents only and requiring entrants to self-quarantine; advising on health and hygiene measures including hand-washing, social-distancing and usage of masks; enhanced testing internally and at various points of entry into the country; suspension of learning in all educational institutions; advising Kenyans to use cashless transactions; restricting unnecessary public congregations; closing open-air markets in various counties; closure of morgues and requiring burial within 24 hours of the dead bodies in various counties to avoid unnecessary and lengthy congregation; recommendation that both public and private sector entities allow their employees to work from home; and restricting non-essential travel both locally and internationally.

However, it is my considered believe that more can be done through a collective and unified national effort with a 360-degree view of the problem. As with every prescription; the side effects of the interventions by the Government have to be carefully managed lest we cure one disease, the corona virus, but create yet another more deadly disease to replace it in the form of an economic meltdown. This would become a case of the medication becoming more adverse than the disease itself. For example, whereas the Government has put in place requisite emergency measures to reign in the corona virus pandemic, otherwise referred to as the COVID-19, the measures have the potential to occasion an economic downturn of disastrous proportions unless parallel and concurrent measures are put in place to stabilize the economy, cushion ordinary Kenyans and minimize the effects of containment of the virus on the economy.

With the projected rise in infections in Kenya and worldwide we anticipate that the Government of Kenya and others globally will take even more stringent measures to protect their citizens and stem the spread of the virus. These measures will potentially lead to partial and in extreme cases total lockdown in various countries and Kenya may not be an exception. Already, the effects of the corona virus pandemic and the resultant measures against it are causing debilitating effects on the economy.

Cases in point include the following; The Nairobi Securities Exchange (NSE), was hit as soon as the first case of corona virus was reported in Kenya with panicked investors making indiscriminate sale of shares resulting into total market capitalization shrinking by Ksh.120 billion in one of the largest declines in a single day in the history of the Nairobi Securities Exchange. By March 16, the NSE wiped off more than Ksh.500 billion in paper wealth for investors. The tourism industry which in 2018 earned Kenya Approximately Ksh.157 Billion while employing 1.1 Million Kenyans directly and indirectly is expected to experience significant losses in jobs and revenue given the measures already taken by the government in shutting down borders and restricting entry in an attempt to lock out the virus and slow down transmission. The 30-day ban on all conferences of international nature and those that have more than 15 participants will further impact the performance of this sector. Several counties including Mombasa and Nyeri counties have banned nightclubs and social gatherings, while several beaches have been closed as well. Already several hotels, lodges, tour operators, restaurants, entertainment centers and recreational facilities are reporting closures, limited operations and inevitably job losses anticipated to be in their thousands.

With most countries locking out airlines from countries that have reported cases of the corona virus; the aviation sector will also be significantly affected. Kenya Airways for example has been forced to stop or in cases limit flights to China, Rome, London, Paris, USA, Geneva, South Africa and all other countries that have already reported the virus and estimates that it is losing at least Ksh. 800 million a month, noting that the situation could change more dramatically in coming days as more restrictions in global travel materialize. This will also have a significant hit on various sectors of the economy including importers, exporters, tourism and availability of essential goods including medicines and other supplies not to mention the knock on effect of job losses and price hikes necessitated by resultant shortages.

In the period between 12^th – 16^thMarch 2020, more than 37 cargo ships that supply goods to Kenya and the rest of the region had failed to dock at the Mombasa port, having cancelled their arrivals. Mombasa is the gateway through which Kenya, Uganda, South Sudan, Rwanda, Burundi and parts of Tanzania, Ethiopia and the Democratic Republic of Congo (DRC) import their goods. This is likely to see a surge in prices of consumer goods including critical supplies such as medicines in the entire region. It will also impact clearing and forwarding businesses, the transport and warehousing sectors among others, which will also potentially lead to business closures and job losses.

The suspension of learning in Kenya’s approximately 50,000 learning institutions with a student enrolment of about 18 Million and 350,000 Teachers and Lecturers supports millions of businesses that provide supplies to about 18.5 Million students. They risk losing their livelihoods apart from the obvious disruption to learning in our institutions.

Flower exports from Kenya to the EU markets have dropped by fifty percent in the last couple of weeks due to the financial crisis caused by the Corona virus. There are over 100 flower farms in the country which directly employs over 200,000 workers. This decline in demand has occasioned losses of over 1,000 jobs in the flower farms in Naivasha alone. This will inevitably have a ripple effect on other supporting sectors such as agro-chemicals, transportation, and cargo services. The mass closure of open-air markets countrywide also spells disaster for millions of ordinary village folk, farmers and households who rely on these markets not only as a source of livelihood but also as a source of food and daily supplies.

The list of the sectors of our economy impacted by the corona virus pandemic is inexhaustible but just to summarize other often overlooked sectors like the boda-boda sector which is estimated to comprise close to 500,000 motor bikes transporting an estimated 14.4 million people every day with earnings averaging about Ksh. 400 million in a day which translates to Ksh.146 billion annually. Job losses in this sector would potentially impact millions of Kenyans. This is not to mention farmers, fisherman, construction workers, water vendors and many others whose livelihoods will be affected by the COVID-19 Impact.

It is therefore clear that the Corona Virus pandemic poses a significant existential threat not only to the physiological health of Kenyans but also to the economic well-being of all sectors of our economy and society at large and the effects are projected to be far reaching with devastating impact upon our livelihoods. According to the Kenya National Bureau of Statistics, Kenya’s active working population employed in the formal sectors comprises about 17.9 Million Kenyans out of which approximately 6.5 Million are part-time, casual or seasonal workers who are at high risk of lay-offs as a result of the corona virus instigated economic downturn. There is another approximately 7.1 Million informally employed Kenyans engaged in the traditional economy who directly or indirectly supply goods and services to the formal sector and households. They too risk losing their livelihoods due to depressed demand for goods and services or due to restrictions in place to control spread of the virus.

Based on the above situation analysis, it is my hypothesis that between 30% – 50% of Kenyans fall into the high risk category that could lose their economic livelihoods or be adversely affected as a result of the Corona Virus Pandemic to the extent that will require government interventions in the form of an economic rescue package. Apart from the economic impact on Kenyans directly, the companies and organizations that provide goods and services, employment and pay taxes to the exchequer will also be greatly affected.

Several countries have already recognized the negative economic impacts of the corona virus on their citizens and constructed safety nets to reduce its severity. Countries like the USA, the United Kingdom, Japan, Italy, Germany and Japan have put rescue measures in place focused on their citizens directly and stimulus packages of tax rebates and incentives to stimulate their economies and save their countries from a financial crisis. Some of these measures include; financial, salary and credit support for small and medium sized enterprises, increasing unemployment benefits for those that are laid off and tax breaks for corporates.

Considering the magnitude of the problem in Kenya, potentially affecting up to 50% of the population adversely, I urge the Government of Kenya to urgently come up with a rescue plan and an economic stimulus package. As responsible citizen; I hereby make feasible suggestions on how the impact of interventions to the corona virus pandemic can be effectively-managed.

One, I propose enhancement of the national capacity for e-commerce. To minimize movement and physical interactions whilst retaining delivery of goods and services to the populace and keeping businesses afloat, to facilitate ‘reduced physical contact’ trading and delivery of goods and services by tested and health certified personnel operating under protection. This would minimize movement yet keep the economy vibrant.

Two,I propose increased countrywide internet access. According to the Communications Authority of Kenya, mobile phone penetration stands at 100.1 per cent in Kenya.[Number of Active Sim-Cards vs. the Total Population].Universal mobile phone penetration backed up by 89.7% active Internet users as of Jun/2019, E-Commerce is viable for a large part of Kenya’s population. The government should therefore consider incentivizing telecommunications service providers to significantly lower the cost of internet services and cloud hoisting to increase nationwide access.

Three, I propose enhancement of the national capacity for e-learning. To reduce student’s exposure whilst retaining delivery of quality education, the government should equip schools with e-learning facilities or alternatively centralize the service within the Ministry of Education and make it accessible to learners by increasing internet access countrywide in collaboration with telecommunications services providers as already stated above.

Four, the Government should cushion low income earners. There are approximately 6.5 Million workers who are either casual, seasonal or part-time employees in the formal sector and another 7.1 Million informally employed Kenyans engaged in the traditional economy who directly or indirectly supply goods and services to the formal sector and households. The majority of these approximately 14 Million Kenyans are low income earners who live in informal settlements or rural settings and are at the highest risk of losing their livelihoods as a result of a corona virus instigated economic downturn.

Five, I propose the following measures to cushion the economy against adverse effects; Adjust tax threshold upwards in the short-term to increase take home salaries of low income earners; subsidize maize millers and producers of essential foodstuffs and other commodities to offer them at highly subsidized rates to retain consumer affordability of essential commodities; Incentivize petroleum producers and marketers to bring down the cost of fuel that creates a knock-on effect to reducing the cost of transport and manufacturing and hence lower the price of manufactured goods; offer tax-breaks or waivers to employers to eradicate possible lay-offs; lower interest rates to reduce the cost of borrowing and encourage uptake of loans; undertake free screening of corona virus in high density population areas; and provide social workers in the informal settlements to assess the state of well-being of residents of informal settlements and other vulnerable groupings. The tax cuts should target high employing sectors such as manufacturing, construction, education, tourism, wholesale and retail, communication and telecommunication. Equally, I propose that the Government considers allowing companies to retain VAT remittances during a specified period to be used to support payroll expenses and cushion against job losses; defer remittances of employee income taxes to also support payroll expenses and spur growth and increased investment; incentivize banks to put moratoriums on loans or offer debt-restructuring or deferment during the crisis period; and consider reduction of corporate tax from 30% to 15%.

Six, it is my considered opinion that any intervention by the Government to avoid job losses and keep the private sector afloat must make SMEs central to such a plan because they employ more than 80% of the working population in Kenya and play a central role in the country’s economic growth. It is on this premise that I propose that apart from lowering interest rates and offering SMEs the tax breaks already discussed above; the government should additionally consider a loan guarantee scheme for SMEs to enable them gain access to fast and affordable credit to support operations and cushion them against the expected economic downturn.

Seven, the various levels of government should revise their budgets to cut down on non-essential spending and redirect their expenditure to stabilization of the economy against the backdrop of an anticipated economic downturn occasioned by the corona virus pandemic. The savings realized can be used to fund the economic stimulus programs in this proposal. For Example the auditor general reported that in the 2018/2019 financial year all the 47 devolved units spent a total of Ksh.16.2 billion on foreign and local travel while during the same period the national government spent nearly Ksh.12 billion on both local and foreign trips during the first nine months of the 2018-2019 fiscal period. This totals approximately Ksh.28 Billion. Such expenditure among other non-essentials is unwarranted and can be redirected to fund a stimulus package.

I now wish to conclude with a famous quote from Frances J. Berigan who once said that; ‘Citizens do not measure development in such abstract indexes as gross domestic product or gross national product. Consciously or unconsciously they measure development in terms of the defenses you have constructed against their most natural adversaries such as hunger, ignorance poverty and disease’.

Eliud Owalo is a Management Consultant specializing in Strategy’ formulation, implementation and control.