The latest World Bank economic analysis for Kenya projects the economy to contract by between 1.0 percent and 1.5 percent in 2020, as ongoing COVID-19 containment measures and behavioral responses restrict activity in Kenya and its trading partners.
The Kenya Economic Update, Navigating the Pandemic, notes the downturn in economic growth reflects the more severe economic impact of the pandemic to date than had been initially anticipated, including a large impact on the national accounts of the closure of education institutions since March. In response, the government has deployed both fiscal and monetary policies to support the healthcare system, protect the most vulnerable households, and support firms to help preserve jobs, incomes and the economy’s productive potential. With a sharp decline in tax revenues due to the weakening in economic activity, and tax relief, and an increase in COVID-related spending needs, the fiscal deficit has widened, and debt vulnerabilities have risen. The fiscal deficit widened to 8.2 percent of gross domestic product (GDP), up from the pre-COVID budgeted target of 6.0 percent of GDP, and Kenya’s debt to GDP ratio has risen to 65.6 percent of GDP as of June 2020, up from 62.4 percent of GDP in June 2019.
“As the COVID-19 pandemic continues to threaten both the lives and livelihoods of Kenyans, we remain committed to supporting the government to allocate sufficient resources to the health sector to combat the pandemic, continue with mass testing, support self-quarantine, social distancing, and protect the most vulnerable groups,” said Keith Hansen, World Bank Country Director for Kenya. “It is equally critical to provide well-targeted support to the most vulnerable affected households.”
Beyond strengthening health systems and protecting incomes, the report recommends several near-term actions that can play a role to combat recession and revive the economy’s productivity, creating the conditions for a resilient and inclusive recovery. Ensuring continued access to safe healthcare, including for non-COVID-19 related health concerns, remains a priority. Given fiscal constraints, this will require redirecting expenditures to the highest priority areas, whilst maintaining a focus on raising the efficiency of spending and ensuring the transparent use of funds.
Following the job and income losses precipitated by the crisis, the report notes support is needed for the “new poor” whose livelihoods have been affected. This could be achieved through a horizontal scale-up of social protection programs, appropriately targeted, timely, and temporary while the crisis persists.It is critical to ensure continued support to vulnerable households, while safeguarding human capital through expanded access to digital technology, combined with better access to information to mitigate usage of negative coping strategies (i.e. asset liquidation) and combat food insecurity while offsetting the increase in poverty.
“Following the extraordinary economic support efforts necessitated by the crisis, Kenya’s economic recovery can be supported by the authorities returning to an appropriately-timed and balanced fiscal consolidation path, to reduce mounting debt vulnerabilities and safeguard macroeconomic stability,” said Alex Sienaert, World BankSenior Economist and lead author of the report. “Kenya will also need to enhance its existing institutional setup for monitoring and responding to future communicable disease outbreaks, and further the still-critical “Big 4” agenda for medium-term inclusive growth, including realizing the government’s vision of sustainably providing universal healthcare.”
Kenya’s economic outlook remains highly uncertain, as the COVID-19 pandemic continues to unfold in the country, and globally. Under baseline assumptions, the economy is projected to rebound quickly in 2021, lifting real GDP by 6.9 percent y/y. A major factor in this strong rebound is the unusual impact on the national account’s treatment of education sector output normalizing, which is projected to add 2.2 percentage points to real GDP growth next year.Delayed availability of vaccines, and prolonged social distancing and other needed COVID-19 countermeasures, could undermine the projected recovery in economic activity.
The report’s policy section focuses on options to strengthen healthcare system and testing capacity, to support firms, and to protect the most vulnerable households to cope with the COVID-19 global pandemic.
Partnership with Private Sector is Key in Closing Rwanda’s Infrastructure Gap
The COVID-19 (coronavirus) pandemic has pushed the Rwandan economy into recession in 2020 for the first time since 1994, according to the World Bank’s latest Rwanda Economic Update.
The 17th edition of the Rwanda Economic Update: The Role of the Private Sector in Closing the Infrastructure Gap, says that the economy shrank by 3.7 percent in 2020, as measures implemented to limit the spread of the coronavirus and ease pressures on health systems brought economic activity to a near standstill in many sectors. Although the economy is set to recover in 2021, the report notes the growth is projected to remain below the pre-pandemic average through 2023.
Declining economic activity has also reduced the government’s ability to collect revenue amid increased fiscal needs, worsening the fiscal situation. Public debt reached 71 percent of GDP in 2020, and is projected to peak at 84 percent of GDP in 2023. Against this backdrop, the report underlines the importance of the government’s commitment to implement a fiscal consolidation plan once the crisis abates to reduce the country’s vulnerability to external shocks and liquidity pressures.
“Narrowing fiscal space calls for a progressive shift in Rwanda’s development model away from the public sector towards a predominantly private sector driven model, while also stepping up efforts to improve the efficiency of public investment,” said Calvin Djiofack, World Bank’s Senior Economist for Rwanda.
According to the Update, private sector financing, either through public-private partnerships or pure private investment, will be essential for Rwanda to continue investing in critical infrastructure needed to achieve its development goals. The analysis underscores the need to capitalize further on Rwanda’s foreign direct investment (FDI) regulatory framework, considered one of the best in the continent, to attract and retain more FDI; to foster domestic private capital mobilization through risk sharing facilities that would absorb a percentage of the losses on loans made to private projects; and to avoid unsolicited proposals of public–private partnership (PPP) initiatives; as well as to build a robust, multisector PPP project pipeline, targeting sectors with clearly identified service needs such as transport, water and sanitation, waste management, irrigation, and housing.
While the report findings establish clearly the gains of public infrastructure development for the country as whole, it also stressed that these gains tend to benefit urban and richer households most.
“Rwanda will need to rebalance its investment strategy from prioritizing large strategic capital-intensive projects toward projects critical for broad-based social returns to boost the potential of public infrastructure to reduce inequality and poverty,” said Rolande Pryce, World Bank Country Manager for Rwanda. “Any step toward the Malabo Declaration to allocate 10 percent of future infrastructure investment to agriculture, allied activities, and rural infrastructure, will go a long way to achieving this goal.”
Greenpeace Africa responds to the cancellation of oil blocks in Salonga National Park
On Monday the UNESCO World Heritage Committee decided to remove Salonga National Park in the Democratic Republic of the Congo from the List of World Heritage in Danger. The decision follows clarification “provided by the national authorities that the oil concessions overlapping with the property are nul[l] and void and that these blocks will be excluded from future auctioning.”
Oil blocks overlapping with Salonga were awarded by President Joseph Kabila in the twilight of his regime. Greenpeace Africa has repeatedly demanded their cancellation, while local leaders voiced their opposition to the project in light of its impacts on communities.
“A decision by President Felix Tshisekedi to cancel all oil blocks in Salonga Park must be followed by a decision to cancel oil blocks in Virunga Park and across the Cuvette Centrale region. These are vast areas rich in biodiversity that provide clean water, food security and medicine to local communities and which render environmental services to humanity,” says Irene Wabiwa Betoko, International Project Leader for the Congo Basin forest.
The Salonga National Park, which is Africa’s largest tropical rainforest reserve, was inscribed on the World Heritage List in 1984. The park plays a fundamental role in climate regulation and the sequestration of carbon. The park is also home to numerous endemic endangered species such as the pygmy chimpanzee (or bonobo), the forest elephant, the African slender-snouted crocodile and the Congo peacock. Salonga had been inscribed on the List of World Heritage in Danger in 1999, due to pressures such as poaching, deforestation and poor management. The government of DRC later on issued oil drilling licences that encroached on the protected area, posing a threat to the wildlife-rich site.
“DRC’s auctioning of oil blocks has not only been scandalously lacking transparency and menacing for particularly sensitive environmental areas – they neither benefit Congolese people nor the planet. Instead of privileging a small group of beneficiaries of the toxic fossil fuels industry, diversifying the DRC’s economy should be done through renewable energy investments that will make energy accessible and affordable for all,” Irene Wabiwa concluded.
Greenpeace Africa urges full transparency from both UNESCO and the DRC government and calls for the publication of all supportive documents regarding the decision to cancel the aforementioned oil blocks, as well as the map of the nine oil blocks that are still being auctioned in the Cuvette Centrale region.
Domestic violence, forced marriage, have risen in Sudan
Deteriorating economic conditions since 2020 and the COVID-19 pandemic have fuelled an increase in domestic violence and forced marriage in Sudan, a UN-backed study has revealed.
Voices from Sudan 2020, published this week, is the first-ever nationwide qualitative assessment of gender-based violence (GBV) in the country, where a transitional government is now in its second year.
Addressing the issue is a critical priority, according to the UN Population Fund (UNFPA) and the Government’s Combating Violence against Women Unit (CVAW), co-authors of the report.
“The current context of increased openness by the Government of Sudan, and dynamism by civil society, opens opportunities for significant gains in advancing women’s safety and rights,” they said.
Physical violence at home
The report aims to complement existing methods of gathering data and analysis by ensuring that the views, experiences and priorities of women and girls, are understood and addressed.
Researchers found that communities perceive domestic and sexual violence as the most common GBV issues.
Key concerns include physical violence in the home, committed by husbands against wives, and by brothers against sisters, as well as movement restrictions which women and girls have been subjected to.
Another concern is sexual violence, especially against women working in informal jobs, but also refugee and displaced women when moving outside camps, people with disabilities, and children in Qur’anic schools.
Pressure to comply
Forced marriage is also “prominent”, according to the report. Most of these unions are arranged between members of the same tribe, or relatives, without the girl’s consent or knowledge.
Meanwhile, Female Genital Mutilation (FGM) remains widespread in Sudan, with varying differences based on geographic location and tribal affiliation. Although knowledge about the illegality and harmfulness of the practice has reached community level, child marriage and FGM are not perceived as key concerns.
Women’s access to resources is also severely restricted. Men control financial resources, and boys are favoured for access to opportunities, especially education. Verbal and psychological pressure to comply with existing gender norms and roles is widespread, leading in some cases to suicide.
The deteriorating economic situation since 2020, and COVID-19, have increased violence, especially domestic violence and forced marriage, the report said. Harassment in queues for essential supplies such as bread and fuel has also been reported.
Data dramatically lacking
Sudan continues to move along a path to democracy following the April 2019 overthrow of President Omar Al-Bashir who had been in power for 30 years.
Openly discussing GBV “has not been possible for the last three decades”, according to the report.
“GBV data is dramatically lacking, with no nation-wide assessment done for the past 30 years, and a general lack of availability of qualitative and quantitative data,” the authors said.
To carry out the assessment, some 215 focus group discussions were held with communities: 21 with GBV experts, as well as a review of existing studies and assessments.
Research was conducted between August and November 2020, encompassing 60 locations and camps, and the data was scanned through a software for qualitative analysis, followed a model first used in Syria.
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