As East Africa responds to the COVID-19 outbreak, it must balance managing the infection without threatening the most vital, yet excluded, segment of the economy – the informal sector, says Wayne Hennessy-Barrett, CEO and Founder, 4G Capital.
Africa’s informal sector provides over 80% of employment and contributes over 50% of GDP.
Though governments have reduced taxes in countries like Kenya, this will not help cushion the informal sector which depends on day-to-day income to live.
In the absence of robust national welfare systems, these communities are particularly vulnerable to the economic impact of countrywide lockdowns aimed at curbing the spread of the coronavirus.
“As COVID-19 spreads, the majority of Africa’s population may have no option but to prioritise their economic needs over the health implications of the virus,” he says.
Many in the informal sector are also unable to take the necessary health precautions to limit the spread of the virus.
The majority of the 150,000 informal micro-businesses which receive unsecured loans from 4G Capital in Kenya and Uganda, operate in crowded open-air markets where isolation and social distancing are impossible.
The lack of access to running water and sanitation is also an issue.
According to a survey conducted by the Kenya Integrated Household Budget, 80% of living quarters have no place for handwashing near a lavatory.
“Financial inclusion and access to health services are more critical than ever. We have all been forced to realise how connected we are, how the well-being of our neighbours, rich or poor, is as important as our own. We are each other’s keeper,” writes Hennessy-Barrett in an opinion piece for African Business.