- Most governments around the world have implemented both economic and social measures to protect their populations from the harmful effects of the scourge.
- Studies indicate that funding liquidity is essential for the efficient and stable functioning of the financial system.
Covid-19 is not the first disease outbreak to disrupt supply chains. Severe Acute Respiratory Syndrome (SARS), measles, swine flu, Ebola and bird flu have all led to trade disruptions. But none of these outbreaks have disrupted global trade and national supply chains like Covid-19.
The devastating effects of Covid-19 have included disruptions in the labor supply, increased debt burden, job losses, business collapse, loss of livelihoods and the deaths of more than five million people around the world.
According to Price Waterhouse Coopers (PWC), supply chain resilience is essential for economic recovery. An efficient supply chain system ensures higher efficiency rates, quality control, better customer relationship and service, faster production cycle, lower production costs and overall improvement in performance financial resources of an organization.
Most governments around the world have implemented both economic and social measures to protect their populations from the harmful effects of the scourge. In Kenya, the Central Bank of Kenya (CBK) has taken unprecedented policy measures to provide abundant liquidity to core funding markets and maintain the flow of credit.
Studies indicate that funding liquidity is essential for the efficient and stable functioning of the financial system, benefiting not only those who depend directly on basic markets, but also the economy as a whole.
To mitigate the negative socio-economic and financial impact of the pandemic, the government, through the central bank, instituted fiscal and financial measures, including the reduction of personal and corporate income tax rates. businesses, lower turnover tax and value added tax, immediate supplier payment and tax refunds, increased tax breaks and increased financial transfers to vulnerable groups.
In addition, a number of monetary measures have been instituted, such as lowering cash reserve requirements and extending the maximum duration of repo agreements from 28 to 91 days, working with banks and service providers. payment services to remove fees on mobile money and mobile banking transactions, and require banks to renegotiate terms and restructure loans for borrowers, who have difficulty servicing their loans due to the pandemic.
President Uhuru Kenyatta recently announced the suspension from the list of credit reference bureaus (CRBs) for defaults on loans below 5 million shillings.
As a result of these fiscal and monetary interventions, a number of sectors have strengthened their resilience in the midst of the pandemic. For example, the monthly volume of person-to-person cash transactions increased 87% between February and December 2020, including an increase in diaspora remittances.
During the same period, M-Pesa transaction volume below 1,000 shillings increased 114%, while 2.8 million more customers were added to mobile money transactions. During this period, online business transactions have experienced significant growth.
Contracts are now negotiated online via video conferencing, universities have resorted to online education, outlets have encouraged online ordering and home delivery, among other online transactions.
According to the Kenya National Bureau of Statistics (KNBS), the economy has remained resilient despite temporal containment measures, including banning local and international travel and stopping travel within and outside of Kenya. some counties. The economy has been supported by accelerated growth in agricultural production, construction activities and health services.
The pandemic has taught us many indelible lessons. Today, most countries are turning in on themselves and reconsidering their supply chain strategies.
Governments in developed economies have stepped up their call for companies to carefully approach processes that will ensure resilience in the face of future disruptions in global supply chains and industry value chains.
Most multinationals are restructuring their outsourcing strategies for the provision of essential inputs for domestic operations to mitigate the risks of external disruption from any future disruption.
In Japan, for example, the government allocated $ 2.2 billion to Japanese companies operating in other Asian countries to locate in Japan.
In the United States, a bill has been introduced in the United States to address the resulting financial implications for companies that choose to relocate their production base from China. In addition, India is exploring ways to attract Chinese manufacturers through reduced corporate taxes, among other incentives.
For full recovery to be achieved, the Kenyan government must improve national supply chains by encouraging the relocation of industries to counties to exploit untapped resources and for equitable distribution of resources.
Actors in the logistics, transport and supply chain sectors must deploy innovative measures in inventory management and distribution, engage in strategic partnerships with other stakeholders and intermediaries throughout the value chain.
Panya, Senior Lecturer at Jomo Kenyatta University of Agriculture and Technology and Trainer in Procurement and Contract Management