Businesses have received a boost during this COVID-19 period after the Central Bank of Kenya (CBK) released Kes. 35.2 billion as additional liquidity availed to banks to directly support borrowers distressed by the pandemic.

Furthermore, CBK lowered the Central Bank Rate (CBR) to 7.25 percent from 8.25 and reduced the Cash Reserve Ratio (CRR) to 4.25 percent from 5.25 percent.

CBK Governor Dr. Patrick Njoroge, who is also the Chairman of the Monetary Policy Committee (MPC) said that they will ensure that the interbank market and liquidity management across the sector continue to function smoothly.

“The MPC will closely monitor the impact of this change to its policy stance, as well as developments in the global and domestic economy, and stands ready to take additional measures as necessary. In this regard, the Committee decided to reconvene within a month for an early assessment of the impact of these measures and the evolution of the COVID-19 pandemic.” He said.

The Coronavirus which broke out in December 2019 has so far caused global devastation to countries through loss of life and tremendous negative impact socially and economically.

Although the pandemic’s impact on the country’s economy is still evolving, he said, all signs show that it could be severe.

He further stated that the committee’s main focus is to minimise the economic and financial impact brought by the pandemic.

The committee noted that, “as a result of the pandemic, economic growth is expected to decline significantly in 2020, from a baseline estimate of 6.2 percent to possibly 3.4 percent, arising from reduced demand by Kenya’s main trading partners, disruptions of supply chains and domestic production. The fundamental concerns and anxieties centre on the health impact, job losses, and duration of the crisis. The ongoing interventions by the Government are aimed at containing the pandemic and moderating the economic and social impact.”

“The MPC Private Sector Market Perception Survey conducted in early March 2020

indicated that inflation expectations remained well anchored, mainly due to expected lower food and energy prices. However, respondents revised downwards their optimism on economic prospects, due to COVID-19 concerns. Nevertheless, they expressed a favourable outlook about the renewed focus on MSMEs and agriculture, payments of pending bills by the government, the decline in international oil prices, benefits from infrastructure investments, and improved lending to the private sector, “the committee stated.

The CBK governor also pointed out that global growth is highly uncertain but expected to weaken significantly in 2020, mainly due to the adverse direct and indirect impact of COVID-19 across the world. Trade flows have been significantly disrupted, while the continued volatility in international financial markets will worsen the outlook. In a shift of stance, central banks in the major advanced economies are implementing accommodative monetary policy to stabilise the financial markets and support economic growth.

The IATA said its latest analysis showed that annual passenger revenues will fall by USD 252 billion if severe travel restrictions remain in place for three months.

The coronavirus pandemic could spell “apocalypse” in the airline industry without urgent government aid, the global aviation association said Tuesday, warning that carriers could lose more than USD 250 billion in revenues this year alone.

The International Air Transport Association said its latest analysis showed that annual passenger revenues will fall by USD 252 billion if severe travel restrictions remain in place for three months.

That would mark a 44% drop compared to 2019 revenues, and is more than double the USD 113 billion drop previously predicted by IATA before countries around the world began introducing sweeping travel restrictions.

“It is the deepest crisis we ever had in our industry,” IATA chief Alexandre de Juniac told reporters in a virtual briefing, calling on governments to quickly step up and provide desperately needed liquidity.

“Airlines are fighting for survival in every corner of the world,” he said in a statement, pointing out that “travel restrictions and evaporating demand mean that, aside from cargo, there is almost no passenger business.”

“For airlines, it’s apocalypse now. And there is a small and shrinking window for governments to provide a lifeline of financial support to prevent a liquidity crisis from shuttering the industry.”

IATA has not been shy about sounding the alarm in the crisis, and last week warned that up to USD 200 billion would be needed to rescue the world’s airlines.

On Tuesday it said that while some governments were stepping up, it was still far from enough to cover the needs.

“We need money,” Juniac told reporters.

He stressed that IATA fully supported government measures to slow the spread of COVID-19, which has now infected nearly 400,000 people worldwide and killed close to 17,000, according to an AFP tally based on official data.

“But we need them to understand that without urgent relief, many airlines will not be around to lead the recovery stage,” he said.

He pointed out that some 2.7 million airline jobs were at risk, with 24 times that number of jobs on the line down the travel and tourism value chain. (AFP)

Source: https://www.thenewsminute.com/article/airline-industry-headed-apocalypse-without-aid-global-aviation-body-iata-121083

The Kenya Association of Travel Agents (KATA) has called upon the government to act urgently in shielding the travel industry from the economic effects brought on by the COVID- 19 pandemic that has caused global devastation.

KATA Chariman Mr. Mohammed Wanyoike stated through a brief update on the ongoing devastating impact of the Coronavirus on the travel industry in Kenya, that the industry is currently witnessing a grounding due to the announcement that international flights have been denied entry into Kenya effective midnight on Wednesday 25th March,2020.

“We are witnessing the shutdown of the travel industry. The economic effects are getting worse by the day and could become more permanent if the government does not act now.” he said.

Chairman, Mr. Mohammed reported that “the industry has evaluated its internal position consultatively and has taken up immediate measures to safeguard the health of the Travel Agents industry by the CEO’s taking a 90% pay cut in March 2020 and all industry employees going on unpaid leave from April,2020 for a period of two months. Travel Agents business is aligned onto Airlines, and hence in the absence of operating Airlines the Travel Agents businesses are 100% vulnerable”

The travel sector has continued to witness a drastic decrease in travel owing to the travel restrictions put in place by the Governments of Kenya, USA, UK, and European Governments, Middle East and Asia including India. As such, mid of March, some airlines cancelled their scheduled operations into Kenya. These airlines include Air India, Etihad Airways, South African Airways and RwandAir. Our National carrier Kenya Airways has suspended flights to and from key business and tourist destinations within their network.

Mr. Mohammed further said, “During the month of February 2020 the Travel Industry in Kenya recorded a decline in passenger number bookings of 50%, followed by a drastic cancellation of flight bookings, conferences and events resulting in a revenue loss to the sector of 85%. Over 95% of forward bookings for the month of April 2020 have also been cancelled since Europe, America and the Middle East issued lock down notices for non-citizens. The Travel industry has recorded Zero bookings this week and the forecast for April to June 2020 is the same. This is an unprecedented occurrence, and travel agents have no cashflows to support their employees in the coming months should the government fail to intervene”

Other notable findings in the travel impact analysis include:

• Total spending on travel in Kenya in 2019 was Kes. 1.7billion on tickets, airline operating fees, and ancillary products and services. This has been projected to plunge by 60% by the end of 2020.
• The estimated losses by the travel industry alone are severe enough to create job loss across the sectors. The full impact of the crisis is expected to last at least three quarters, with Q2 2020 being the low point.
• The travel industry has over one thousand travel agencies, and it is projected that a majority of the travel agents are facing an imminent risk of collapse.

The association pushed for immediate intervention saying that it is imperative that the Government steps in to provide immediate relief measures for the industry.

“Temporarily shutting off travel from US, Europe and India has already exacerbated the situation caused by the heavy impact of coronavirus on the travel industry and the over 500,000 Kenyans whose jobs depend on travel. We have and will continue to engage with the government on policy steps that are necessary to ensure that travel agencies, 80% of which are small businesses can continue keeping their employees.”

“There are countless stories of travel businesses working hard to earn a day’s living. But the cold reality is that they cannot support their employees if they don’t have any customers, and they don’t have customers because of the actions needed to stop the spread of coronavirus. Government intervention is required to address the operating expenses of these travel agents going forward”, Mr. Mohammed emphasized.

Kenya Airways will restrict its operations to domestic routes after it grounded international passenger travel following the State order banning international flights to curb the coronavirus outbreak.

The airline’s chief executive Allan Kilavuka in a staff memo on Sunday said Mombasa and Kisumu flights will remain operational, offering a sigh of relief to domestic travellers.

The loss-making carrier will, however, ground all international passenger flights from Tuesday midnight, a big hit on its revenues.

The decision comes barely a day after the State ordered all incoming and outgoing international passenger flights to cease operations, starting March 25, 2020.

“To comply with the directive, we have, therefore, temporarily suspended all international services effective midnight March 25, 2020, until further notice,” said Mr Kilavuka in the memo.

The airline, which has so far temporarily suspended flights to and from Guangzhou, China, among other routes, following the outbreak of the coronavirus said the temporary ban will not affect cargo flights.

Cargo flights, Mr Kilavuka said, will remain operational to offer emergency services and supplies.

Customers affected by the suspension can change their bookings for later travel or get vouchers for future travel within 12 months.

“We also recognised that these sudden changes have greatly inconvenienced many of our customers and we would like to apologise sincerely for this but hope that we will come back stronger than ever in due course,” said Mr Kilavuka.

Kenya on March 13 confirmed its first case of the coronavirus. The cases have since jumped to 16 while racing to contact 363 individuals who came into contact with those who have tested positive.

The travel restriction is set to worsen KQ’s already precarious financial position.

The National Securities Exchange-listed firm made a net loss of Sh8.5 billion in the half year ended June, more than doubling the net loss of Sh4 billion the year before as costs rose faster than revenue.

The loss saw the company’s negative equity widen to Sh16.1 billion from Sh2.4 billion, underlining its capital crisis.

Turnover in the review period rose to Sh58.5 billion from Sh52.1 billion, representing a 12.2 percent increase.

Source: https://www.businessdailyafrica.com/corporate/companies/KQ-stays-on-domestic-routes-as-other-flights-grounded/4003102-5501882-86j00iz/index.html

Local airfares have dropped by almost half in most routes as airlines grapple with the falling demand of passengers following measures put in place to curb spread of coronavirus that has hit the country.

Average fares levied by the budget carrier Jambojet in most of the routes have dropped to a low of Sh3,800 in almost all destinations, highlighting the negative impact that the pandemic is having on airlines.

Jambojet announced that it had cut its frequencies in all the routes citing low demand by travellers.

“Following a decline in passenger numbers due to the ongoing Covid-19 pandemic, Jambojet wishes to inform its customers and the general public that we have reduced our flight frequencies to all local destinations,” said the airline.

The airline said it has lost over 50 percent of the passengers on the back of the virus that has almost brought the whole world to a standstill.

Passengers travelling to Malindi and Ukunda will part with Sh4,300, so far the highest cost in the routes where the airline plies, with all other destinations including Mombasa, Kisumu and Eldoret going for Sh3,800.

The budget carrier has been charging between Sh5,000 and 7,000 depending on the route and demand with coastal and Kisumu destinations tending to be the most expensive routes because of higher number of people seeking air travel in these routes.

Kenya Airways, which has been charging as high as Sh12,000 for a one-way ticket to Mombasa and Kisumu previously is now levying Sh6,050 to the Port City of Mombasa and Kisumu.

Other airlines such as Fly 540 have cut their fares to Sh3,540 in most of the routes where the carrier flies as they grapple with lack of travellers.

“It’s a difficult time in the industry. Numbers are plummeting,” said Safarilink chief executive Alex Avedi in a phone interview with the Shipping& Logistics yesterday.

Mr Avedi noted that following the outbreak of Covid-19 virus, cancellation of flights especially by foreign tourist who use the airlines to connect to destinations such as Maasai Mara, has been on the rise.

He noted that their travellers, who normally plan for a seven-day visit into the country are opting to reschedule their flights because, even if they were to come, they will be quarantined for 14 days.

The Corona pandemic has resulted to major changes in the transport sector with a recent directive from the Health Cabinet Secretary requiring passenger service vehicles to carry less people as government moves to tame the spread of the virus. Most matatus are carrying half of their capacity but the move has had an impact on passengers who are now paying double fares.

Source: https://www.businessdailyafrica.com/corporate/shipping/Local-air-ticket-prices-fall-50pc-on-low-demand/4003122-5502892-136qwjp/index.html

Kenyans jetting into the country ahead of the midnight deadline will be spending between Sh2,133 and Sh10,664 for stay at the government-approved quarantine centres.

The hotels ranging from five-star to three-star facilities are charging between Sh7,465 and Sh10,664 ($70 to $100) in Nairobi, while Mombasa Beach Hotel is charging Sh4,265 ($40) all on full board.

Kenya School of Government and Kenya Medical Training College and Kenyatta University are the most affordable at Sh2133 ($20), all on full board basis.

Health Cabinet Secretary Mutahi Kagwe said Tuesday those coming into the country until March 25 — when the airport will be closed for international passenger flights — will undergo mandatory quarantine at government isolation centres at their own expense.

“They will be given a choice at the airport from tonight. Wherever they go, there will be in each facility Ministry of Health officials and security personnel … They are not prisoners, we just want to ensure security,” he added.

Source: https://www.businessdailyafrica.com/economy/Quarantine-charges-at-hotels-tapped-by-State/3946234-5503164-b24t94/index.html

Kenya National Parks and sanctuaries will remain open to welcome visitors and nature lovers.

KWS Director General Brig. John Waweru said in a statement that KWS has ensured the highest standards of cleanliness and hygiene are met ensuring that visitors remain safe.

“Kenya Wildlife Service is taking a series of measures to curb the spread of the virus including providing customers and staff members with a clean and safe environment by upholding the requisite hygiene measures and maintaining adequate contact distance as guided by the Ministry of Health,”.

He assured the public that KWS staff have been sensitised to maintain cleanliness in visitor’s parking, points of sale and visitor facilities in an effort to deliver a safe experience at the points of contact.

“We are committed to continue monitoring the situation and will provide updates as the situation evolves. The health and well being of our visitors, staff and stakeholders remain our key priority,” Brig. Waweru stated.

So far, 8, 981 people have lost their lives after being infected with COVID- 19. Over 220, 000 others are infected globally. On Wednesday 18^th March, 2020, the Kenyan government announced three more infections bringing the number of infection cases in Kenya to 7.

The Treasury is preparing undisclosed tax relief to traders and homes under a fresh bailout for coronavirus-hit businesses that will also allow personal borrowers who get into difficulties to extend their loans for up to a year.

President Uhuru Kenyatta on Wednesday said fiscal measures including tax relied will be unveiled in coming days to cushion workers and businesses from the economic slowdown triggered by the virus outbreak.

This came after bankers agreed to offer individuals relief on their personal loans should they encounter challenges and allowed small and medium enterprises to restructure their bank debts at no cost

Fears of contracting the disease has slowed down social activities in the country with malls and restaurants taking a hit, setting the stage for job cuts and reduced pay.

Lockdowns and entry bans imposed around the world to fight coronavirus has hit Kenya’s horticulture and tourism, which generated combined hard currency Sh260 billion last year.

Kenya has seven confirmed cases of Covid-19, and the government has imposed measures aimed at reducing its spread, including banning public gatherings and closing schools indefinitely.

“What we are dealing with primarily is a health crisis. But unfortunately, this is a health crisis that is bound to have financial and economic impact,” said Mr Kenyatta.

“We are also looking at other areas where from a fiscal point of view, we want to see what we can also do to support our people during this difficult time. In due course, we shall brief you.”

Treasury officials remained tight-lipped on the planned tax relief in an economic environment where the government has been battling below-target revenue collections, prompting budget cuts on non-essential items like travel.

Experts reckon Kenya should offer targeted financial packages given its constraints in raising funds, unlike cash-endowed developed economies which are implementing far-reaching fiscal stimulus plans for companies and households.

“While the government would want to issue significant tax reliefs, this looks unlikely given the revenue performance and expenditure needs like salaries and debt repayments,” Nikhil Hira, a director and tax expert at Bowmans law.

Some of the options on the cards include removal of tax on essential items like sanitisers and protective masks, delayed payment of taxes, a rejig of income tax bands to offer higher personal tax relief that stands at Sh1, 408 monthly and a reduction of VAT.

Other tax measures could target sectors heavily hit by the virus such as horticulture, whose earnings fell seven percent last year to Sh142.72 billion, and tourism, which could benefit from reduced taxation.

“What the government is likely to do is to resort to measures that will give short-term relief to businesses and individuals who are struggling because the business has scaled down,” said Mr Hira.

“These could be little but essential things like waiving PAYE for three months, delaying corporate tax payments and taking off excise duty from airtime and data to support firms working from home given their cash flows are going to be heavily impacted.”

Already, businesses are struggling with reduced cash flow, ushering in job costs and near stagnant pay.

“We don’t want this health crisis to become a financial crisis,” Dr Njoroge, the CBK governor, told a televised news conference.

Personal loans make up 28 percent of the total borrowing in the industry, Dr Njoroge said, adding that it will be up to individuals who encounter challenges to request the relief from banks.

Source: https://www.businessdailyafrica.com/economy/Uhuru-signals-tax-relief-to-boost-virus-hit-businesses/3946234-5496500-e03b3wz/index.html

Hotel occupancy has fallen to its lowest in the recent past as the government’s guidelines meant to contain the spread of Covid-19 result in a sharp decline of tourist numbers, and limited movements and fear of crowded space cripple restaurants.

A spot check by the Business Daily showed that hotels in tourist-dependent Coast region were recording occupancy as low as 20 per cent compared to more than 75 per cent around the same time last year.

In Nairobi, restaurants have switched to offering home delivery services to arrest a dip in walk-in clients while setting up sanitary measures and promoting safety distancing to give assurance to clients.

“Business is bad. I have seen a 50 per cent drop in clients and although we have put delivery in place it is not picking up since most of the clients are not used to it yet. If the situation persists I may be forced to close some of the branches,” city eatery Café Deli’s managing director, Obado Obadoh, said.

Sankara Hotel PR and marketing manager Keijah Bekah said business had dropped significantly since the government issued the directive limiting movements. She said the hotel management will soon make a decision on their operations.

 “We have beefed up sanitisers and temperature checks and implemented government safety guidelines but traffic has still dipped,” she said.

Diani Reef manager Jotham Mwang’ombe said client numbers cannot sustain the staff and that they will be forced to send some of them home.

Kenya Association of Hotel Keepers and Caterers (KAHC) executive officer Sam Ikwaye said there is need to start planning for the future of the industry to cushion the investors.

“The industry needs more than six months to recover since it depends on advance bookings. There is need to deal with the situation at the moment if we have to recover on time. In the next one week, with the same situation, we shall not be having any international tourist in our hotels,” said Mr Ikwaye.

Travellers Hotel sales manager Bonface Wafula said the government should consider a tax waiver to hotels.

“At the moment we are operating at 29 per cent compared to 89 per cent in March last year and the numbers are going down every day,” said Mr Wafula, adding the government should consider a stimulus package to jump-start the industry.

Source: https://www.businessdailyafrica.com/corporate/companies/Hotel-occupancy-falls-on-travel-ban/4003102-5496210-11hemoq/index.html