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Funding health most effective in virus fight

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Funding health most effective in virus fight

Nurses in protective gears at Mbagathi Hospital
Nurses in protective gears at Mbagathi Hospital during the launch of an isolation and treatment centre for the new coronavirus dubbed COVID-19, in Nairobi on March 6, 2020. PHOTO | JEFF ANGOTE | NMG 

Highly contagious pandemics like the coronavirus can easily cause a shutdown of the economy. With households being forced to isolate from others, economic activity slumps.

A country can find itself facing a wave of defaults, with severe disruptions to financial intermediation.

Yet when it comes to policy responses, different fiscal and monetary authorities have come up with different and packages.

This week, President Uhuru Kenyatta unveiled a wide range of fiscal measures including relief on payroll taxes, value-added tax (VAT), corporation taxes, cuts in salaries of the President and his deputy, and of top senior public servants.

We must wait to see how these measures, will impact households and firms during the period of the pandemic. Without a doubt, the tax incentives will go a long way in insulating firms and households from the negative impact of the pandemic.

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But in a context where a far greater number of the population is either unemployed, is self-employed or works in the informal sector, stabilisation packages that put too much emphasis on tax incentives may not work too well.

As you look the totality of the tax breaks and incentives announced by President Kenyatta on Wednesday, such as relief for persons earning a gross monthly salary of up to Sh24,000, reduction of the maximum income tax rate from 30 percent to 25 percent, and the reduction of corporation tax from 30 percent to 25 percent, the impression you get is too much focus has been given to the formal sector.

In the developed West, the focus is on replacing incomes of the self-employed and unemployed, ameliorating disruptions to livelihoods and stabilising firms. The elements include ramping up government purchases, income tax cuts, unemployment benefits, unconditional cash transfers and liquidity assistance to firms.

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The decision by our government to cut VAT from 16 per cent to 14 percent will ease prices of goods, stimulating consumption, especially of discretionary goods and services.

But how does the cut in the VAT rate help an operator of a barbershop, a Jua Kali mechanic or an owner of the ubiquitous 10 by 10 shops of Nairobi’s central business district who sell goods and services that are not vatable?

We all know that the pandemic is bound to cause a sharp reduction in activity in sectors of the economy that are contact-intensive such as hospitality and leisure, transportation, and travel

How does a reduction of VAT cushion you in circumstances when your biggest problem is a lack of customers? Most of the benefits of the tax measures the government announced on Wednesday will not go Wanjiku.

Instead, the tax cut will be enjoyed by the rich and the formal sector.

If the pandemic intensifies- with the government being forced to impose a lockdown, we will have to go back to re-examine the stimulus package to consider measures to cushion small businesses owned by the self- employed persons.

What small and big businesses need most right now is liquidity to meet fixed costs and to pay for wages and rent during the period of the pandemic. Which brings me to the measures the Central Bank of Kenya announced to address the pandemic.

All over the world, monetary authorities have been quick to respond, with the Federal Reserve and other central banks leading the pack by cutting rates to zero percent.

Indeed, central banks have returned to the tool kit they used during the global financial crisis of 2008. Our central bank has reacted by reducing the signalling rate by one percentage point.

Besides, it reduced the Cash Reserve Ratio to 4.25 percent thereby allowing banks to access additional liquidity of Sh35 billion.

Let’s wait and see how the actions of the monetary authority will impact on the cost of loans.

The truth is that monetary policy does not transmit very well in this country. Contrary to what happens in other countries, our banks do not respond to changes on the Central Bank Rate by immediately repricing their loans.

On the cash ratio, we must watch out lest banks use expanded access to their base rates, by directing the money into T-bills.

My parting shot: the most effective fiscal policy measure remains massive investment in public health measures to suppress and mitigating the virus.

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No safety net for millions in black economy amid lockdowns : The Standard

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Bricklayer Salvatore La Barbera is worried that in a matter of days his family of four will run out of food and, with Italy locked down by coronavirus, there is no way he can earn money to buy more.

“Working in the black market is impossible, because the police ask why you are walking in the street,” he told Reuters from Palermo, the capital of Sicily. “They want to know everything and you risk being fined.”
La Barbera is one of millions in the shadow economies of Europe who face dire risks because they will fall through the safety nets being rolled out as economies slide into reverse.
In Sicily, one of Italy’s poorest regions, concerns have been raised over the plight of the needy after some people refused to pay for goods at a Palermo supermarket and police were called.
According to an International Monetary Fund report in November, the share of the shadow economy is significant in many European countries, ranging from 10% to over 40%.
It put Italy’s shadow economy at 27.3% in 2016, the latest year for estimates, but Greece – with 30.2% – had the highest rate among the advanced economies that share the euro currency.
The numbers working in the informal economy go much higher in developing economies. The International Labour Organization puts the total at 2 billion, or more than 60% of the world’s employed population.

STEALING FROM THE SICK: Why hospitals are healthy wards for criminals – The Nairobian  

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Bailout money doled out by governments to private companies to encourage them to retain employees through the coronavirus storm is unlikely to help those in shadow economies because, due to widespread lockdowns, it won’t generate spending and there will be no trickle-down benefits.
Greece has offered the self-employed 800 euros a month as long as the crisis lasts, provided they pay taxes, leaving hundreds of thousands without financial help.
“All others who work in the gig economy but are completely off radar, meaning they do not report any income to the tax authorities, are not eligible for this support,” a finance ministry official said, adding that assistance for those in the black economy would be announced in the coming days.
“NO ONE WILL BE LEFT BEHIND”
One of those who will get no unemployment benefit or state handout is Katerina, 30, a literature teacher from Crete who hasn’t paid taxes in eight years.
“I had five students. I lost three because of the coronavirus crisis. Some parents couldn’t pay me because they have financial problems too,” said Katerina, who earns about 10 euros an hour for lessons. She declined to give her full name.
“I have been forced to put off payments for electricity and water and I have asked the bank to postpone instalments on my car,” she said. “Right now I’m fully dependent on my parents financially but I don’t know how long they will be able to support me.”
In Spain, some domestic workers have lost their jobs due to the crisis and are living from day to day, according to Ana Heras, coordinator of Caritas’s Economic Solidarity team.
“They can’t go, as we have, to fill up their trolleys at the supermarket with two weeks’ worth of shopping,” she said. “We’ve seen many domestic workers coming to our food banks as a result.”
In Italy, which has suffered the deadliest coronavirus outbreak and has about 3.7 million people working in the black economy, Prime Minister Giuseppe Conte told those struggling to provide for their families that the state would help.
He promised a 4.3 billion euro fund for mayors and released another 400 million euros for food coupons “for people who don’t have the money to do their own shopping”.
“No one will be left behind,” Conte said.
A government source said the Treasury was looking at creating an emergency salary of between 600-800 euros a month for those who have no income from work or pension and are excluded from the current welfare safety net.
That will mainly help seasonal workers, domestic workers, and those dependent on the black market.
Emanuel Sammartino, 32, was laid off from his seasonal job at the airport in Sicily’s second city Catania. He is expecting a baby in August and is surviving on his savings.
“My company alone had to provide 40 seasonal workers, but up to 90% of flights have been cancelled so those jobs have gone. The government has not taken into account our situation yet,” he said.
In Palermo, 39-year-old La Barbera said he was fired from a job last July, and then worked for himself as a bricklayer and a blacksmith.
He has also worked in the film industry as an electrician, including on the set of “The Traitor”, the story of mafia boss Tommaso Buscetta. However, no films are being made now.
“Day after day I think what can I do to deal with this bloody virus,” he said. “But now everything has stopped.”


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Locusts Stealing Lives: Fears of farmers, herders in Somaliland as a plague looms : The Standard

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Muse Aarinte watched helplessly as a swarm of locusts swept into his village, devouring all the crops, bushes and even the leaves on the trees. Now he fears a plague is coming. Geerisa village, a remote, mud-and-thatch settlement in an arid, breakaway region of Somalia, survived the first outbreak of locusts in January. But Aarinte doesn’t think Geerisa’s 1,900 families will be so lucky when the second wave comes.

Since December, billions of desert locusts have swarmed eastern Africa, ravaging crops, decimating pasture and threatening the livelihoods of more than 20 million people who depend on farming and livestock for their survival.
“The swarm covered the land and sky as far as the eye could see,” said Aarinte, 93, chief of the village of animal herders, 350 km (220 miles) northwest of Hargeisa, capital of the self-declared Republic of Somaliland.
“They ate everything … there was no vegetation left. Soon they will return in bigger numbers. It is a curse sent to take land, livestock and people.”

SEE ALSO :Leaders warn of crisis as locusts raid region

The outbreak, which is the worst in a generation, has seen hungry swarms – some the size of cities – sweeping across Somalia, Ethiopia and Kenya, feasting their way through hundreds of thousands of hectares of crops and grazing land.
The United Nations has called the infestation – which has also affected Uganda, Djibouti, South Sudan, Eritrea and Tanzania, Sudan – “a scourge of biblical proportions”.
But so far limited resources have hampered efforts to fight the locusts, particularly in impoverished Somaliland – and the worst is yet to come.


Bishop who fought for Kenyans  

A second generation of the insects – about 20 times larger – has spawned in countless pockets across the Horn of Africa. Within weeks, they will reach adulthood and take flight.
“The timing could not be worse. The second wave coincides with the planting season and the rains which are due in April,” said Daniel Molla, food security and nutrition advisor for the United Nations’ Food and Agriculture Organization (FAO).

SEE ALSO :We must make bold choices this year to secure our future

“The swarms will wipe clean the vegetation just as it is sprouting. Farmers will have nothing to harvest and pastoralist communities will find little for their animals to eat.”
Molla warned that if the swarms are not destroyed in coming weeks, the population of the insects could increase 400-fold by June, turning the infestation into a full-fledged regional plague, which would be more difficult and expensive to contain.
BANGING POTS, BURNING RUBBISH
Locust swarms are not new to Somaliland, a poor, drought-prone region of 4.5 million people, nestled along Africa’s northeast coast with the Gulf of Aden.
But climate scientists have warned that erratic weather linked to global warming has created ideal conditions for the insects to surge in numbers not seen in a quarter of a century.

SEE ALSO :County official dismisses senator’s claims of graft in Wajir

Warmer seas have led to more cyclones in the Indian Ocean, causing heavy rainfall along the Arabian peninsula and the Horn of Africa, producing the perfect environment for breeding.
Since crossing the Gulf of Aden into eastern Africa in December, the swarms – which can travel up to 150 km (93 miles) in a day – have devoured fields filled with crops such as maize, millet and sorghum, and stripped bare grazing land.
A swarm of a square kilometre contains 40-80 million locusts and can eat the same amount of food in one day as 35,000 people.
One horde sighted in northern Kenya this year was reportedly 2,400 square km – more than twice the size of Paris or New York, according to the FAO.
The pests have severely hit communities across the climate-vulnerable region who were already reeling from three consecutive years of droughts and floods.

SEE ALSO :Locust invasion: State ditches guns for aerial sprays

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“The swarm that came here was so big it blocked out the sun,” said Abdi Shakur Muhammed, chief of Botor village, a dusty hamlet of a few traditional huts made of branches and animal hides, 65 km northwest of Hargeisa.
“We tried waving the locusts off the crops. Some people banged on pots, others burned rubbish hoping the smoke would drive them away. Some people prayed. But there were so many of them, it was impossible.”
By the time the swarm took off the next day, Botor’s 600 families had lost 60% of their harvest of maize, millet, beans and vegetables, he said.
“Only Allah will have the power to save us if it happens again,” he added.
Muhammed is right to be worried.
A few hours drive away, across the rugged, desert plains dotted with nomads herding camels, sheep and goats, a second generation of locusts has spawned in Awdal region, near Somaliland’s coast.
Thousands of the pink-tinged insects – not full adults yet – hop and flutter in a patch of scrub, learning how to fly.
“The first wave of locusts laid their eggs here. You can see how the offspring is now maturing. By April, they will have flown,” said Mohamed Mohamoud, director of Somaliland’s plant protection department, as the insects flittered around him.
“Based on predictions of the wind, they are expected to then move into Ethiopia and Kenya, causing further devastation there. We need to contain them now, while they are still on the ground.”
RACE AGAINST TIME
But Somaliland has limited capacity.
Although it has operated independently of Somalia since 1991 – with its own president, parliament, currency and international airport – it is not globally recognised as a country.
And despite being relatively safer than Somalia, where civil war and Islamic militancy have raged for almost three decades, Somaliland is often perceived as equally insecure.
A lack of foreign trade and investment, coupled with ineligibility for loans from the World Bank or International Monetary Fund, has meant much of Somaliland remains impoverished and under-developed.
One in three Somalilanders live on less than $1.90 a day, the World Bank’s measure of extreme poverty.
With livestock exports making up 40% of gross domestic product and around half the population dependent on animals for their livelihoods, Somaliland’s Agriculture Minister Ahmed Mumin Seed is worried about the locust infestation.
“As a government, we are compelled to take action against the locust infestation and we have mobilised some funds and manpower, but we have limited resources,” said Seed.
“We still have time to contain them before the end of March/early April. Once they fly off and leave Somaliland and go to the neighbouring countries, it will be beyond our ability to control them.”
The FAO has appealed to international donors for more than $150 million to help the eight east African nations control the outbreak. So far it has raised $110 million.
Even so Somaliland is struggling to respond.
Kenya, Ethiopia and Uganda have deployed a handful of planes to kill off swarms through the aerial spraying of pesticides.
But fears of insecurity in Somalia – and Somaliland – have made it hard to find firms willing to contract out aircraft.
Response has, therefore, been limited to ground control operations, with pick-up trucks mounted with sprayers moving through locust-breeding sites, diffusing biopesticides.
But with 80,000 hectares of land to cover and only two vehicles, each with a capacity to spray around 100 hectares in a day, efforts are moving at a snail’s pace as April draws closer.
FAO officials plan to increase the number of vehicles to eight in the coming days, adding that authorities will spray as many locust sites as they can before the insects take off.
One company has agreed to provide an aircraft for aerial spraying, but that it is expected in mid-April, they add.
Geerisa’s Aarinte isn’t optimistic.
“I’ve endured many things in my life. In the 2018 drought, my 1,500 sheep, 20 donkeys and 50 camels starved to death,” he said. “If the locusts come, let them come. We will die together with our animals.” 


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Emirates Receives Govt Bailout to Survive COVID-19

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Dubai’s state-owned airline, Emirates, has received a government bailout to enable it to remain afloat during this COVID-19 pandemic. The airline has seen its passenger fleet grounded since 24th March 2020.

Dubai’s deputy ruler, Sheikh Hamdan bin Rashid Al Maktoum, said that the government is committed to providing full support by injecting fresh capital into the airline.

Already, the airline has implemented survival measures, including reducing staff salaries by between 25% and 50% for the next three months. Tim Clark, the outgoing president of the airline, will go without pay for the same duration.

The International Air Transport Association (IATA) says that airlines worldwide might need close to $200 billion (KSh20.8 trillion) capital injection for them to remain afloat in this COVID-19 pandemic.

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Emirates is a state-owned airline based in Garhoud, Dubai, United Arab Emirates. It is a subsidiary of The Emirates Group. It is also the largest airline in the Middle East, and the world’s fourth-largest airline by scheduled revenue passenger-kilometers flown.

See Also:

Airlines Need $200 Billion to Survive

COVID-19 Continues to Take a Toll on African Airlines

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