(Newswire.net — June 1, 2020) — Kenya, one of the most prominent countries in Africa, has had problems regarding the economy. Most of its major industries have fallen sharply for various reasons. Recently-appeared Covid-19 also had its toll, and currently, there are over 1,400 infected in the country with more than 50 deaths.
Kenya tea exports and airways have gone into the red amid the crisis. It is a notable problem, but digital businesses manage to revive the country somehow and maintain its stability. In this country, we will review the harsh economic situation as well as digital companies.
Digitalization the key for success
Living in the 21st century caused everything to be dependent on technologies and digitalization. Africa struggled a lot to implement innovations regarding financial technologies, but at the present moment, they help to keep the country’s economy afloat.
Kenya alongside Nigeria and South Africa has become a hub for Forex traders. One of the top FX brokers in Kenya managed to establish themselves not only in the region but also in the whole world as well, and this was not unexpected, considering the fact that youngsters are more motivated to earn money.
Also, for the country’s economy, digital businesses created new values and traditional mixed industries with digital technology.
Kenya tea export going into the red
In the season 2018-2019 the volume of tea exports from Kenya decreased by 25% compared with the previous one, the annual profit from tea trade fell by 36%. The main trading partners of Kenya are Pakistan, Egypt, the United Kingdom and Iran, together these countries import 70% of the annual crop. All of them, except Great Britain, are growing markets, but Egypt experienced several years of political upheaval, Iran was unable to make timely payments, and conflicts in Yemen and Sudan limited sales throughout the region. All this, combined with a record increase in tea production in Kenya in an optimistic 2019 year, led to tea auction prices dropping by 21%.
The main player in the Kenyan tea market is the Kenya Tea Development Agency (KTDA), which sells 60% of Kenyan tea grown by 650,000 small-scale farmers. Most of the Kenyan tea is sold at auctions in Mombasa and with the participation of various kinds of intermediaries, eating away a significant part of the income (half or more) from tea producers.
Given all of the above problems, the tea industry in Kenya suffered dramatically. In order to change the situation, in 2019 in Kenya, the Tea Pricing Regulation was adopted, which not only regulates the settlement process between KTDA and farmers but also allows the sale of green tea leaf only to registered producers. At the same time, a limit is set for the sale of tea directly and through auctions, which reduces the share of intermediaries in favour of farmers’ income.
Of course, these measures have not solved all the problems of the industry and farmers find it too hard to survive the difficult times for the Kenyan tea industry. This, in its turn, has a direct impact on the Kenyan economy.
Kenya Airways
Kenya Airways, the major airline companies in the country, also was a victim of an economic downturn. In 2019 the company’s costs rose from 53 billion shillings to 61 billion shillings. And the situation for the company does not look hopeful currently, complemented by the coronavirus as well.
Conclusion
Other major Kenyan industries also have a problem with managing a difficult situation effectively. It directly impacts the economic situation in the state; thus, every owner should be alert to avoid complications in future.