Kenya Directs Stimulus to Local Contractors to Ease Virus Pain

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Awarding deals to local contractors and creating temporary jobs will be central to Kenya’s plan to stimulate an economy battered by the coronavirus.

The government is set to purchase locally made vehicles and hospital beds, and will send cash directly to digital wallets to aid the most vulnerable, President Uhuru Kenyatta said on Saturday in unveiling details of his 53.7 billion-shilling ($503 million) plan.

“The injection of this money into the economy will stimulate growth and cushion families and companies as together we navigate our way out of the Covid-19 pandemic,” Kenyatta said in a televised speech, urging lawmakers to quickly approve the stimulus. “Jobs have been lost, businesses have had to close and the economy is generally on a go slow.”

East Africa’s largest economy, whose trade deficit was about $11 billion in 2018, has been severely hit by the virus outbreak with the government projecting growth of about 2.5% compared with earlier estimates of 6.2%. The pandemic came as Kenya was dealing with recurring floods and a rare desert-locust invasion, all of which have claimed livelihoods.

The government has recently tapped international lenders for funding. The World Bank approved$1 billion, while the International Monetary Fund agreed to a loan of $739 million and the African Development Bank provided 188 million euros ($205 million).

Kenyatta’s administration plans to hire 5,000 health workers for a year, spend 1.7 billion shillings on beds for public hospitals and 600 million shillings to buy locally made vehicles. More than 5 billion shillings will go to hiring locals to repair roads and bridges damaged by heavy rains and to implement flood-control measures. About 6.5 billion shillings will go to help students continue their studies using digital platforms and to produce desks.

The National Treasury wants to fast-track the payment of 10 billion shillings of tax refunds and to provide soft loans to tourism businesses. The government will also spend 1.5 billion shillings to help flower exporters access international markets at a time when flights are few and freight charges have doubled.

Kenyatta said his administration has been transferring 250 million shillings each week to vulnerable families using mobile money technology, without mentioning when that begun. Cash transfers have helped to bypass brokers and cartels who in the past benefited almost more than the victims of disasters like floods, Kenyatta said.

“We have managed to catalyze local economies through these families,” Kenyatta said. This will help the government cushion the economy from the bottom up, he said.

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