Horticulture companies may soon start closing down or downsizing if they continue incurring losses caused by the coronavirus after their markets abroad were destabilised.
The industry is reported to be incurring losses to the tune of Sh100 million a day, an improvement from the situation last month and April, when the daily loss was about Sh350 million.
This is according to a report by online foreign exchange broker Scope Markets Kenya, examining factors influencing movement of major currencies, stocks and commodities globally.
REDUCED EXPORT VOLUMES
“As European countries have begun to ease restrictions, some demand has returned and losses have reduced to about $1 million a day, but the outlook remains bleak throughout the summer months.
“Kenyan farms have drastically reduced export volumes to 50 per cent, with a sizeable number suspending exports altogether. If the current situation does not improve soon, companies are facing downsizing or closure, which will result in increased poverty, insecurity and hunger,” the company said.
It said exports of flowers, vegetables, herbs and fruits (more than 80 per cent of horticulture exports) were lost in March after European capitals went into lockdown, suspending international flights.
It reviewed movement of key currency, stocks and commodities during the Covid-19 pandemic and impact on world economies, financial markets and people.
A second wave of infections because of the easing of lockdowns in major global economies, and uncertainty in the timing of reopening of air travel affecting economic growth and warnings around recession of global economy are among the factors listed.
“News of breakthroughs in the coronavirus vaccine and slowing down of infection rates may trigger recovery of the travel and hospitality industries which have suffered massive losses,” the broker said.
Kenya has already received Sh100 billion budgetary support from the World Bank to help the government sustain key projects and to support vulnerable citizens.
This follows warnings that the gross domestic product could contract to one per cent because of the pandemic, a converse of earlier GDP projections in February, of a six per cent growth for Kenya in 2020.