Traders in Kenya who depend on imports from China are staring at possible massive loses because of the air and sea international travel disruption caused by the coronavirus.
In the capital Nairobi, traders who @financialday spoke to are worried of running out of stocks before the coronavirus crisis is sorted.
Kenya is a major importer of Chinese merchandise and is also as the regional hub for other importers from the Great Lakes region, thanks to better China-Africa air connections and the Port of Mombasa.
The most recent data by the Kenya National Bureau of Statistics show that in 2018, Kenyans imported goods worth Sh370 billion from China, against exports of Sh11.5 billion.
That figure for imports is likely to have hit Sh400 million when the 2019 data is released.
China has become the global factory and therefore the worries about trade slowdown are global. Data released by various agencies over time reveals that 90% of manufactured products costing less than Sh2,000 come from China.
Coronavirus causes global panic
This is perhaps why panic over how long the coronavirus crisis will take is spreading across the world faster.
As of today, headlines have started screaming pointing to the economic disruption and possible consequences of a prolonged coronavirus spread.
“Coronavirus: Pressure grows to re-open factories,” wrote the BBC. “Coronavirus Fallout Threatens Auto Industry’s Supply Chain,” wrote The Wall Street Journal.
“Coronavirus disrupts the heart of electronics manufacturing in China,” wrote CNBC. “China Coronavirus Lockdown Crippling Global Supply Chain,” wrote the VOA.
The Chinese Embassy in Kenya is offering good news. In its regular update on the spread of coronavirus, noted the following through its Twitter handle.
“Good news! New confirmed cases outside Hubei declined for 5th consecutive day!”
“Official statistics show that between 4 and 8 February, the number of newly reported confirmed cases outside Hubei kept declining for 5 days running: 731, 707, 696, 558 and 509.”
Kenya and the rest of world hope that this crisis not only comes to an end but that the source of the coronavirus is confirmed and measures are taken to prevent its occurrence in the future.
This is because China has become the biggest trading partner with Kenya. In all cities, towns and market centres across Kenya, there are many retail traders who have stocked mainly imported merchandise from China.
Coronavirus a chance to review the global supply chain
In Nairobi for instance, products from China dominate the retail market for clothing and electronics. Many families and the youth depend on the sale of these products to eke out a living.
Chan Chun Sing, Singapore’s Minister for Trade and Industry captured the thoughts of the many when he said coronavirus outbreak offers a chance to look at the global supply chain resilience.
What would happen in case of a prolonged China shutdown in case of a catastrophe? This is important because today, China is not only a producer of low-end products but also some of the most sophisticated equipment which drives the global economy.
This is a question the world needs to start finding answers to. While we have other promising ‘global’ factories’ like India, Africa should take advantage and partner with Chinese counterparts to outsource part of manufacturing in the continent.
Contact us: editor@financialday.co.ke