Since the first case of COVID-19 was reported in Kenya on March 13, 2020, the country just like other countries in the world, has been experiencing massive destruction of the economy in terms of GDP decline and job losses (Odhiambo et al. 2020). While the country had started experiencing the economic impacts prior to COVID-19, the emergence of virus has accelerated Kenya’s economic troubles.
How has COVID-19 has affected the Kenyan Economy?
COVID-19 has negatively impacted the Kenyan economy as seen in the performance of the financial markets, disruption of global supply chains, volatility of the Kenyan currency, reduction in diaspora remittances, and reversal of prior monetary and fiscal policies.
Performance of Financial Markets
Since the first reported case, a majority of foreign investors who had made huge investments in Kenyan securities at the Nairobi Stock Exchange, started disposing off their securities fearing a market collapse, leading to a huge slump on the securities prices traded at the Exchange (Karungu, et al. 2020). The NSE-20 Share Index has been steadily losing its value declining by 300 basis points between 15th March 2020 and 15th May 2020, a trend that is mirrored in the performance of the Kenyan economy.
Moreover, as shown in the table below the Year to Date (YTD) performance of some of the large-cap stocks or Blue-Chip companies on the exchange as at 15th May 2020 have been on a dramatic decline.
It is important to note that the Blue Chips typically record huge losses in their YTD performance during times of local crisis as investors sell-off their stocks and shift to less risky havens as opposed to holding other risky securities traded in the Nairobi Securities Market (NSE) see (Odhiambo et al, 2020a).