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Kenya rolls out USD 500m post-COVID economic stimulus plan

Kenya’s President Uhuru Kenyatta on Saturday, May 23 announced an 8-point economic stimulus programme to boost the economy and mitigate the adverse impact of the COVID-19 pandemic on livelihoods and business activity in the country. 

The intervention, projected to cost Kshs 53.7 billion ( Ushs 1.9 trillion) aims to stimulate economic growth and aid companies and families to “navigate out of the COVID-19 Pandemic”.

Announcing the plan, Kenyatta noted: “COVID-19 is not only a health crisis; it’s also an economic crisis.” The stimulus program will target key sectors of the economy.  

Infrastructure and Manufacturing

The program’s first focus area is on rehabilitating access roads, footbridges and public infrastructure that has been “adversely affected” by the ongoing excessive rains. This, Kenyatta says, will cost Kshs 5bn, that has been set aside to hire local labour for the undertaking. 

“We are convinced, with use of local labour and local construction materials, in line with the Buy Kenya Build Kenya policy, we will stimulate and support the micro and small business enterprises,” he said. 

Similarly, Kenyatta’s plans for the manufacturing sector include a strategic enforcement of the Buy Kenya Build Kenya policy, with an initial Kshs 600m already set aside to purchase locally manufactured vehicles. The government hopes, with this intervention, to sustain the operations of local vehicle manufacturers and their attendant employees. 


For the agricultural sector, the plan allocates Kshs 3bn for supply of farm inputs and aims to reach 200,000 small scale farmers in Kenya. A further Kshs 1.5bn will go to support the flower and horticultural industries’ access to international markets, during a period when their work is adversely affected by shortage of flights into and outside the country. 

President Kenyatta intimated that: “these interventions will support the sustenance of our farming communities and provide continued gainful employment for thousands of workers in our bread basket areas.”

Tourism, hospitality

On a related note, the tourism sector, which has been especially hit by restrictions on movement and termination of international flights, will receive a jumpstart to cushion it from heavy financial losses. 

Government plans to provide soft loans to hotels and related establishments through the Tourism Finance Corporation (TFC), a statutory body set up to facilitate long-term investment in Kenya’s tourism industry by providing affordable development funding and advisory services.

SME support

Small and medium enterprises (SMEs), whose liquidity has been adversely affected by COVID-19 are also targeted to receive stimulus. Ksh 10 billion is earmarked to fast-track payment of outstanding Value Added Tax (VAT) refunds and pending government arrears, while the SME Credit Guarantee Scheme will receive a Ksh 3 billion injection in order to ease access to credit for small businesses. 

Health and education

For the health sector, the Uhuru administration intends to hire 5,000 healthcare workers with diploma qualification, for a period of one year, to enhance the country’s COVID-19 rapid response capability and quicken implementation of its Universal Health Program (UHP). 

Ksh 1.7 billion will go into expansion of bed capacity in public hospitals as well as supporting critical medical research and innovations. 

Government has also allocated an additional Kshs 6.5 bn to the ministry of Education, to renovate schools’ infrastructure, hire 10,000 teachers and 1000 ICT interns to support digital learning as they draw plans for re-opening of schools, among other interventions. 

Rough times ahead

While it’s still unclear when businesses will fully return to economic productivity following the Coronavirus pandemic and subsequent government containment policies globally, its devastating impact on the world economy is readily apparent. The International Monetary Fund (IMF) projects that the global economy will contract by 3%, while Sub-Saharan African economies are expected to contract by 1.6%.

A recent survey of 147 firms in Uganda by the Economic Policy Research Centre found that most enterprises are struggling to stay afloat and could close if the prevailing economic situation persists for about three months more. 

The think tank proposed cuts on tax rates, reducing taxable income, offering tax credits and tax refunds as possible ways that government could come to the aid of distressed businesses.

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