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Turnover Tax: Days of Extortion, Days of Revolt

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Informal micro and small businesses are being unfairly targeted by a new tax that is considered by many as extortionist and punitive. How can the government morally justify a tax on a sector it has done little to assist? Will the new tax force these businesses to close down or to revolt?

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Turnover Tax: Days of Extortion, Days of Revolt
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Our government has decided to extort money from the smallest businesses and is trying to make a virtue of it. Imposing the 3 per cent turnover tax (TOT) on informal micro and small businesses is monstrous, and an insult to poor Kenyans. Though legal, TOT is IMMORAL. I echo the prophetic declaration: “Woe to those who make unjust laws, to those who issue oppressive decrees, to deprive the poor of their right and withhold justice…” (Isaiah 10:1 NIV)

The micro and small-scale businesses, which include kiosks, small grocery stores, hair salons and small market traders (generally those at the bottom tier of the informal sector) now have to pay TOT. TOT is a new tax demanded of any resident person whose turnover from business does not exceed or is not expected to exceed Sh5,000,000 ($50,000) during any year of income. It will be payable from 1st January 2020. This tax rate is on the gross sales/turnover and is a final tax.

Mrs. Elizabeth Meyo, the Commissioner of Domestic Taxes at the Kenya Revenue Authority (KRA), states that “from January 2020, if one operates a salon, butchery, or grocery store, you will be required to declare your sales online and pay the taxes on the 20th of each month.” And for one to get a business licence from one’s county government, one will have to pay an extra 15 per cent of the permit fees to KRA as presumptive tax. In complying to these new demands, Mrs. Meyo further claims, “the business owners will have fulfilled their patriotic duty for a better Kenya”.

Various economic findings acknowledge the substantial contribution of the informal sector to GDP in most developing countries. The informal sector is one of the biggest employers in Kenya, and accounts for over 80 per cent of employment opportunities. It is a shame that attention is turning to this sector only for their moolah, and to bridge the gap resulting from dwindling revenue from the formal sector. According to a Kenya National Bureau of Statistics survey published in 2016, the monthly expenditure on salaries and wages for unlicenced micro small and medium enterprises (MSMEs) was Sh9 billion, which translates to 25 per cent of total outlays a piece.

The neglected informal sector

The colonial market design continues to define the contours of our economy, which conditions us to think of the informal sector as inferior to the formal sector. We still perceive it as “traditional”, marginal or peripheral, having no links to the formal economy and making no contribution to modern industrial development. We have therefore neglected this sector.

Some economists have argued that the informal sector is a dead-end for a pool of labour comprising workers who could not gain entry into the preferred formal sector. Others, like Jeffery Sachs, have even gone to pronounce the informal sector’s obituary, stating that it would cease to exist once Kenya achieves sufficient levels of economic growth and industrialisation.

The informal sector is one of the biggest employers in Kenya, and accounts for over 80 per cent of employment opportunities. It is a shame that attention is turning to this sector only for their moolah, and to bridge the gap resulting from dwindling revenue from the formal sector.

Others see the potential of the informal sector’s small businesses. In his book, The Mystery of Capital (2001), the Peruvian economist Hernando de Soto views these informal businesses as a sign of entrepreneurial dynamism, a real force in the market. They could also be useful in an industrial take-off due to their resilience and ability to withstand market shocks over the long haul, as Shem Watako observed in his doctoral studies of micro and small businesses in Kariobangi.

This hubris in the informal sector has got the taxman’s attention. But the challenge is in how they will implement the TOT. Mrs Meyo identifies this difficulty while responding to why Kenya resorted to TOT for small businesses. She explained that “lack of formal structures and a tax framework that suits the [informal] sector have been major drawbacks in the taxman’s quest to tap revenue from this sector”.

The ethical reasoning of those calling for micro and small-scale businesses to pay taxes as demanded is implausible because it does not raise the second order question. Is it moral to make these demands on the poorest of Kenyan businesses? Is it moral to treat the poor with partiality when the new tax regime would disenfranchise them?

A turnover tax is like a sales tax or a value-added tax (VAT), with the difference being that it taxes intermediate and capital goods. It is on an ad valorem basis (based on the value of the good in question, rather than being flat taxes), applicable to a production process or stage. TOT makes the poor pay another indirect tax, while those whose turnover exceeds Sh5 million pay direct tax, which is a better tax plan for their businesses.

Let us consider a hypothetical case of Nyamulu Beauty  Salon, a business run by Achieng’ in Kariobangi, a low-income area of Nairobi, to illustrate this point. With her revenue turnover of Sh100,000 for January 2020, she would enlist for TOT.

NYAMULU BEAUTY SALON, KARIOBANGI TRADER SCENARIO

ITEM REVENUE/COST GOVT TAXES &LEVIES  
Revenue 100 clients @ 1000                  100,000    
Less cost      
Electricity                    (5,000) VAT +Levies                (901)
Supplies (oils, hair pieces, etc.)                  (30,000) VAT @16%            (4,800)
Rent for stall                  (12,000) Rent Tax @10% Incl            (1,091)
Casual workers 2 @500 a day                  (30,000)    
Mshwari fees[1]                    (5,850)    
County license                    (1,250) county license            (1,250)
Operating Trade Profit                    15,900 Total Taxes & Levies            (8,042)

Assumptions

VAT is standard rated for all goods and services

SCENARIO 1 -TOT
Operating trade profit                    15,900    
Less Turnover Tax                    (3,000) Total Taxes & Levies          (11,042)
Net Profit                    12,900   11.04%

 

SCENARIO 2- Personal Income Tax (PIT)
Trade Profit                    15,900    
PIT -After Relief                          (362) Total Taxes & Levies            (8,404)
Net Profit                    15,538 Effective Tax Rate 8.4%

 

SCENARIO 3 Personal Income Tax and VAT Registered[2] (PIT + VAT registered)
Operating Trade Profit                    15,900    
Add-Input VAT recovered      
Electricity                            664    
Supplies                       4,800    
Net Profit/Taxable Income                    21,364    
PIT – After Relief                    (1,182) Total Taxes & Levies            (3,760)
Net Profit                    20,182 Effective Tax Rate 3.76%

Scenario 3 encourages small traders to register for VAT, which is passed through to consumers; the net effect is increased transparency and increased VAT collection for KRA.

TOT PIT PIT +VAT Reg
Profit                  12,900                  15,538              20,182
Effective Taxes                  11,042                      8,404                  3,760
Effective Taxes% 11.04% 8.4% 3.76%

An alternative tax plan to TOT would give a different result. If the above scenario described her business, then under scenario one, where she paid TOT, her profit would be Sh12,900. Under scenario two, where she pays personal income tax, her profit would be Sh15,538. And if she were registered for VAT and also pays PIT, she would have made profit of Sh20,182.

The individual tax plan would, therefore, be more favourable to the poor income business groups than the TOT. Notice also that her business has contributed indirectly to the government’s revenue by more than Sh8, 042. Then, if subjected to the TOT of Sh3,000, she would have contributed Sh11,042 to the government coffers.

Is it moral for a tax regime to erode the business capital of the poor?

The start-up capital of small businesses usually comes from family resources. This tends to limit the size of the businesses, the number of workers they hire, and the level of profits they generate. So they have a limited amount available to reinvest.

In 2016, the Kenya National Bureau of Statistics found that licenced micro establishments reported spending 45.3 per cent of their net income on investments, either as reinvestment or investing in new businesses and investment in agriculture, while expenditure on household and family needs accounted for 44.5 pervcent. In 2016, small and medium establishments spent a significantly large part of their net income on investment, at 63.4 per cent and 69.7 per cent, respectively.

The erosion of capital from small business via the TOT will delay their growth. Rather, by allowing them to grow capital we would help debunk the notion held by some, including the International Labour Organisation (ILO), that these businesses are doomed to remain small. Yet a significant number of entrepreneurs in the informal sector earn more, on average, than low-skilled workers in the formal sector, according to some studies.

It is immoral to deny the poor a fair chance to compete in the market by imposing a tax on their businesses.

Governments have used taxes to shut out a section of the economy. N. Cheeseman and R. Griffiths (2005)[3] point out that turnover taxes can also be punitive when designed to create a disincentive for buying particular products. They say that environmental regulations sometimes encourage this practice.

Despite the expansive nature of the informal sector, aiming at the bottom end of the pyramid is suspect. We must keep in mind that the current regime is struggling with a debt burden that is uncreative and evil. TOT could be an attempt to cut off informal sector traders from the market. There are 1.3 million micro and small enterprises in Kenya, which, according to a government survey, employed about 2.4 million people – 17 per cent of the total workforce in Kenya – in 2009. They were engaged in the following: close to two-thirds (64.1 per cent) of all enterprises were in the trade sector; retailing made up 62 per cent of all trading in Kenya; manufacturing comprised 13 per cent, while services accounted for 15 per cent.

It is immoral for the government to burden the poor.

In a liberal democracy, argues Prof. Nicholas Wolterstorff of Yale Divinity School, the state should act impartially when distributing burdens and benefits to its citizens. Our government is absent in the lives of poor citizens because of skewed development priorities. The poor live in squalour with children attending overcrowded schools. They have dismal access to healthcare and are the main users of public transport on what is left of roads.

But the government now finds it expedient to tax these businesses operating on the margins of our nation, either in the slums of our cities and towns or in the rural areas. Yet it is through their businesses that low-income households have managed to improve their lot, not through any government subsidies or incentives.

There are 1.3 million micro and small enterprises in Kenya, which, according to a government survey, employed about 2.4 million people – 17 per cent of the total workforce in Kenya – in 2009.

We can use taxes for the public good, to even out the inequalities in society and to provide essential services to all citizens. Eric Nelson, a Harvard professor, explains the idea that the state should coercively maintain an egalitarian distribution of property because it is the business of the state to engage in the redistribution of wealth through taxation, thus ensuring the welfare of the poor; this idea is the genesis of welfare states in many European countries.

Forcing a blanket tax without considering the business conditions of payees is reminiscent of the colonial administration’s hut and poll tax of the 1920s. Then, local leaders and community representatives defended their people against the colonial extortion. Responding to the tax demands, Luo leaders in Nyanza consulted and convened a a general meeting at Lundha in Gem on 23 December 1921. About 9,000 people attended from all parts of Nyanza to discuss the hut tax. During the meeting, Chief Ogada Odera of Gem in Central Nyanza lamented: “As regards our taxes, they used to be 3 shillings. Mr John Ainsworth [the Nyanza Provincial Commissioner in Kisumu from 1906] told us that the amount would be increased to 5 shillings. We agreed. The government then increased it to 8 shillings. It is very heavy. Besides, we do not want our women taxed.”

Forcing a blanket tax without considering the business conditions of payees is reminiscent of the colonial administration’s hut and poll tax of the 1920s.

Chief Ogada made a perceptive comment: “As regards the word colony, the government came here and found us occupying the land and now it calls us ‘wasumbni’ [their slaves].”

Most commentators on TOT have sided with the government’s position and made a virtue of the extortion of poor businesses by calling the tax fair, patriotic, and easy to compute and complete. I think they are misguided. Kamotho Waiganjo reflected this distorted thinking when he commented in the Standard:  “But the government was getting no tax benefit from these businesses…those who operate in the formal sector, and who are therefore in the taxman’s spotlight…cough up 30 per cent of annual profits as tax…businesses in the informal sector means that many of the operators in this expansive sector escape the taxman’s dragnet. Not anymore.”

This assumption – that the poor in the informal sector churn out a considerable volume of revenue but do not contribute to the tax pool – is erroneous. TOT is an indirect tax on businesses and not a tax based on income from business profits. Informal sector businesses already pay other indirect taxes that are levied on fuel, electricity, VAT on their goods and rent taxes collected from rental income. Shouldn’t their cost of goods, business expenses, and other costs also be considered, as they are with formal businesses?

Most commentators on TOT have sided with the government’s position and made a virtue of the extortion of poor businesses by calling the tax fair, patriotic, and easy to compute and complete. I think they are misguided.

Some argue that the cost of compliance is low and that all that these small businesses need to do is record their sales. Those paying turnover tax will not need to worry about tracking their expenses; their tax is only on turnover. They say keeping proper business records will benefits business owners because proper records would help them evaluate their business performance, monitor purchases and sales, and make crucial business decisions.

However, the consequences of eviscerating small businesses would be catastrophic owing to sector’s significance in the economy. It may arouse two major reactions from the poor:

First, if the small businesses sense extortion, they may disappear into thin air. These businesses are supersensitive to extortion by the authorities and would hibernate, adjusting their operations till conditions change. The damage in the wake of their disappearance could be devastating. Mr. Francis Atwoli, the Secretary-General of the Central Organisation of Trade Unions (COTU), warned that further taxation on small and medium businesses will not only destroy the fastest growing sector of the economy but also render many Kenyans jobless.

The 2016 Kenya National Bureau of Statistics survey shows that approximately 400,000 micro, small and medium enterprises do not celebrate their second birthday. Few reach their fifth birthday, leading to concerns about the sustainability of this vital sector.

Second, if poor business owners interpret this tax as oppression, they will revolt. Implementation of TOT will conjure up the pain of the colonial era. The colonial hut and poll taxes became a heavy burden on the people of Kenya in the 1920s. B A Ogot[4] (2009:772) observes that it was made worse by the method of collection, which was ruthless and arbitrary. In Nyanza, the colonial regime collected the hut tax from all huts in a kraal, including the cattle sheds. When many people refused to pay these taxes, the colonial authorities, including chiefs and tax clerks, resorted to brutal methods of collection, ordering policemen, chiefs and sub-chiefs to raid villages, set houses on fire, and confiscate property or food stuff such as grains, bananas and cassava.

Since TOT will eat into the livelihood of these business owners, they will revolt. But the authorities will crush their revolt due to their lack the organisational capacity, unlike the UK’s anti-poll tax groups of 1990. Introducing an unpopular “poll tax” is credited for forcing Mrs. Margaret Thatcher out of office in November 1990. The Green Paper of 1986, Paying for Local Government, proposed the poll tax, which charged a fixed tax per adult resident for the services provided in their community, hence the term poll tax. It was a change from payment based on the worth of one’s house to a resident individual. The tax was, therefore, criticised as being unfair, and needlessly burdensome on those who were less well-off. What followed were protests and riots that prompted the abolishing of the tax following the change of government in November 1990.

What should KRA do with poorer businesses?

The government and the KRA, the implementing tax collection authority, can act morally and avoid hurting small-scale businesses. They can make it a priority to rationalise the informal sector rather than wipe it out through harsh tax policies.

Turnover tax, as currently enacted, is elective. Therefore, qualifying small businesses can opt to register for the standard tax system. This move would allow them to be recognised like other businesses. And with sound records, they may take advantage of comprehensive inclusion rules and a reduction process that requires maintaining proof of expenditure. We should make efforts in aiding small-scale businesses to maintain proper business records and wean them into an alternative tax regime.

The government and the KRA, the implementing tax collection authority, can act morally and avoid hurting small-scale businesses. They can make it a priority to rationalise the informal sector rather than wipe it out through harsh tax policies.

This government should heed the words of Hubert Humphrey, the former US Vice President, who on November 1, 1977, said: “The moral test of government is how that government treats those who are in the dawn of life, the children; those who are in the twilight of life, the elderly; those who are in the shadows of life, the sick, the needy and the handicapped.”

The tinders are there waiting for something to ignite them. If the poor interpret TOT as extortion, we may as well have ushered in days of revolt.

 

[1] Trader uses Mshwari for working capital, interests at 7.5% per month.

[2] Allow Voluntary registration for traders who are below the threshold for compulsory VAT registration.

[3] Cheeseman, N., & Griffiths, R. (2005). Increasing Tax Revenue in Sub-Saharan Africa: The Case of Kenya. Oxford Council on Good Governance, Economy Analysis, 6.

[4] Ogot BA. 2009: A History of the Luo speaking people of Eastern Africa. Kisumu Kenya Anyange press ltd.

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Rev. Canon Francis Omondi is a Priest of the Anglican Church of Kenya, All Saints Cathedral Diocese, Nairobi. The views expressed here are his own.

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Tackling Corona: The Need for a People-Driven Response

African governments need to adopt a “whole-of-society approach” to successfully face the threat posed by COVID-19. They need to recognise that involving non-governmental actors in the formulation, as well as in the implementation, of policies to address the pandemic, need not be perceived as a threat to their own legitimacy.

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Tackling Corona: The Need for a People-Driven Response
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The scenes of police viciously assaulting citizens while enforcing a nighttime curfew, as well the death by suicide of a South African woman after being forced into a deplorable government quarantine facility, have exposed the brutal face of Kenya’s coercive response to the coronavirus pandemic. While many have condemned the incidents, some have also felt that coercion is necessary given the extreme threat posed by the virus, the need for urgent action and the failure of the citizens to comply with the government’s directives. There is no time to debate the response, goes the argument. There is only time to act to save lives.

Yet there is a grave flaw at the heart of this argument. These very factors are what make it necessary that there is more, not less, public involvement. The threat being to the whole of society, the response needs to involve the whole of society. Trying to move fast without having a cooperative public in tow is a recipe for failure, as the Kenyan government is learning. And the way to get a cooperative public as well as mobilise society is to engage with the people, not just order them about.

“Epidemics are tests of social and political systems,” writes the Zimbabwean academic and Associate Professor of African Politics at the University of Oxford, Simukai Chigudu, in a fascinating article for the online platform, Africa Is A Country. Citing his book, The Political Life of an Epidemic: Cholera, Crisis and Citizenship in Zimbabwe, which looked into the roots of the 2008 cholera outbreak in his country, he notes that it is the “political, economic and social processes that…shape the trajectory of [an] epidemic”, not just the biological properties of the virus or bacterium involved.

This is not to say that the actions of governments are not important. The trajectory and the evolution of the pandemic so far have been largely dictated by the actions of states. The thousands of lives it has so far claimed are not evenly distributed globally, but rather concentrated in countries that for a variety of reasons either didn’t take the pandemic seriously or were slow to react to it. In a very real sense, it is not just the virus that is killing people; people are also dying from state inaction, incompetence and malfeasance.

The legacy of colonialism

Similarly, as the virus menaces Africa, it has been the actions of African governments – past and present – that have so far determined how the pandemic is unfolding on the continent. When fighting the disease, a crucial constraint for many African societies is the near universal failure to address the legacy of colonialism. In fact, as Prof Chigudu explains in relation to 21st century Zimbabwe, “the long-term factors that led to the cholera outbreak can be traced as far back as the late 19th century when Salisbury [today known as Harare] was founded as the administrative and political capital of Southern Rhodesia [the predecessor state of what is now Zimbabwe].”

In a very real sense, it is not just the virus that is killing people; people are also dying from state inaction, incompetence and malfeasance.

He goes on to write that rather than undoing the discriminatory nature of provision of public facilities, “colonial era by-laws, plans, and statutes largely remained in place, indicating the apparent tension between overturning the racial and socio-economic segregation of Rhodesian city planning and maintaining an inherited sense of modernity and orderliness in urban space”.

This experience will be familiar to many across the continent where, in the words of one of Kenya’s politicians speaking in Parliament in 1966, “Today we have a black man’s Government, and the black man’s Government administers exactly the same regulations, rigorously, as the colonial administration used to do”.

The persistence of colonial states and their twin logics of authoritarian exploitation and classist exclusion means that African governments begin with a deficit of public trust, as well as diminished capacity to implement policies. Just three years ago, Kenya was jailing doctors’ representatives for going on strike to demand a pay rise and improvements to services in public hospitals.

Corruption – another gift of colonialism – has focused attention on vanity projects that provide opportunities for looting, rather than on investments in basic health services. The result is high-end, expensive machines lying idle in hospitals that lack even basic amenities. The entire country, for example, only has around 400 isolation beds, and 155 intensive care unit beds for a population of over 48 million people.

The authoritarian and exclusionist streaks are also evident in the manner in which African governments are currently responding. In Kenya, rather than implementing a holistic approach that would mobilise all communities and civil society, the government has opted for a China-style top-down, dictatorial approach, one that decades of hollowing out of the state has been difficult to impose. Prominent activist Jerotich Seii has noted the “‘elite gaze’ that deploys a language of enforcement”. David Ndii, one of the country’s top economists and public intellectuals, has similarly decried the consequences of what he describes as a “boneheaded securocratic approach to a complex emergency”.

A holistic approach

Yet this need not be the case. Kenya has a long history of indigenous not‐for‐profit organisations, self-help societies and community-based organisations that it could leverage to win consent and mobilise society. In fact, in many communities, NGOs have become surrogates for the government, offering services that the state was either unable or unwilling to provide. They have even managed to penetrate into policy- and decision-making levels.

In Kenya, rather than implementing a holistic approach that would mobilise all communities and civil society, the government has opted for a China-style top-down, dictatorial approach…

As Prof Jennifer Brass noted in her PhD thesis a decade ago, “Contrary to both normative arguments that government should ‘steer’ the ship of state (make policy) while private actors ‘row’ (implement policy), and the belief that government is eroding or becoming irrelevant to the governance process, this dissertation shows that NGOs are now joining public actors and agencies at many levels in decision and policy making regarding service provision.”

Sadly, however, there is little evidence that the Kenyan government is doing much to incorporate the expertise and experience of NGOs and other civil society actors into its planning for COVID-19. When President Uhuru Kenyatta established the 21-member National Emergency Response Committee on Coronavirus at the end of February, there was no one from outside of government included in it. In this, the President went against his own National Contingency Plan which recommended the establishment of a National Public Health Emergency Steering Committee to “provide policy, strategic directions” which would include heads of “responding NGOs”.

Sadly, however, there is little evidence that the Kenyan government is doing much to incorporate the expertise and experience of NGOs and other civil society actors into its planning for COVID-19.

Perhaps the Kenya government’s reluctance to engage with civil society organisations should not come as a surprise. After all, this is a government that for the best part of the last decade has made the demonization of civil society (which its mouthpieces on social media happily branded “evil society”) a cornerstone of its propaganda efforts. Still, it is clear that the state alone cannot address this crisis.

Non-governmental actors, including professional associations, churches and volunteer, community and civil society organisations, will need to be involved in the “whole-of-society approach” that the World Health Organisation (WHO) says is required to successfully face the threat posed by COVID-19. And not just as “rowers”. Across the continent, governments will need to urgently recognise that involving others in the formulation, as well as in the implementation, of policy need not be perceived as a threat to their own legitimacy. As Prof Brass writes, “Governance is not the removal of government, but the addition and acceptance of other actors, including NGOs, in the steering process.”

How effective are lockdowns?

The absence of non-governmental actors at the decision-making table may also be manifesting in the choices that African countries are making. For example, many have opted to go the way of China and other (though by no means all) European countries by imposing “lockdowns” – shuttering factories, businesses and markets; banning mass events from church services to political rallies; and forcing people to stay at home or imposing stringent restrictions on their movement – in an attempt to curtail the rate of spread of the disease and ensure their already fragile health systems are not overwhelmed. Beginning with Rwanda, the lockdowns have swept the continent, affecting economies large and small, from Nigeria to Uganda. In addition, by the end of March, nearly all countries had some form of travel restriction, with more than half imposing full border closures.

However, in an article for The Conversation, Prof Alex Broadbent and Prof Benjamin Smart argue that a one-size-fits-all approach may have lethal consequences for Africa. They note that the “the major components of the recommended public health measures – social distancing and hygiene – are extremely difficult to implement effectively in much of Africa” and that the net effect of lockdowns “may thus be to prevent people from working, without actually achieving the distancing that would slow the spread of the virus”. They also question the value of “flattening the curve” in a scenario where at the best of times public healthcare is inaccessible to a huge proportion of the population.

Similarly, in an interview with Africa Report, John Nkengasong, the director of the Africa Centre for Disease Control and Prevention, which is part of the African Union, also pointed out that lockdowns are not only difficult to sustain but would also “lead to other consequences, such as shortages of food, medicine and other basic supplies”. He also said that the shutdown of air travel and closing of borders across the continent was making it more difficult to coordinate the distribution of desperately needed medical supplies and equipment. Making much the same point on the Kenyan news programme Punchline, Dr Mary Stephens of WHO said that blanket travel bans and border closures would prevent African countries from accessing external medical experts needed to plug gaps in their health systems.

The resort to force by governments across the continent to counter the resistance of their populations to such measures speaks to the lack of a social consensus for the necessity of such measures. It is the poor, for the most part, who will bear the pain of the lockdowns, especially the many working in the informal sector who cannot afford to stay at home for a day, let alone for weeks. Yet they are almost completely excluded from the decision-making table.

Similarly, in an interview with Africa Report, John Nkengasong…pointed out that lockdowns are not only difficult to sustain but would also “lead to other consequences, such as shortages of food, medicine and other basic supplies”.

If they were allowed to have a say, perhaps they would point out that there are other options and examples that African countries could look to. In the Far East, for example, countries and cities like Japan, South Korea as well as Singapore, Hong Kong and Taiwan, while not yet out of the woods, have managed to tackle the pandemic within their borders while largely avoiding the crippling lockdowns.

Nobel laureate Amartya Sen famously declared that “no famine has ever taken place in the history of the world in a functioning democracy”. He noted that democratic governments, “facing elections and criticisms from opposition parties and independent newspapers”, would be compelled to take decisions to avert disaster.

Democracy may not be such a sure shield against epidemics, but it is clear that, at least on the African continent, its absence, and the prevalence of governments used to wielding clubs and guns against their citizens rather than listening to them, may be turning a looming disaster into a catastrophe.

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Slaying the Giant: An Epidemiologist’s Perspective on How Kenya Can Tackle COVID-19

There hasn’t been a pandemic control that has succeeded without social capital. How Kenya and Africa will deal with this pandemic will squarely depend on the strength, resilience and adaptability of our social capital to weather the storm.

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Slaying the Virus: An Epidemiologist’s Perspective on How Kenya Can Tackle COVID-19
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Epidemiologists measure how a disease spreads through populations using the basic reproduction number, otherwise known as R0 (pronounced “R naught”). Typical seasonal flu has a reproductive number of 1.2, while that of COVID-19 is reported to be approximately 2.5.

R = Reproductive number: How many people a given patient is likely to infect. If the reproductive number is greater than one (R>1), each case on average is transmitting it to at least one other person. The epidemic will therefore increase. Reproductive number is affected by factors including but not limited to population density, environment, age and immunity.

Typical seasonal flu has a reproductive number of 1.2; Spanish flu has a reproductive number of 2-3, while COVID-19 is reported to be approximately 2.5.

From a policy planning perspective, it offers a very clear objective: Reduce the reproductive number to less than one (R<1)

D= Duration: How long someone is infectious. If someone is infectious twice as long, then that’s twice as long as they can spread the infection. For COVID-19, people are infectious for up to 21 days. This can usually be reduced by treatment but there is currently no approved treatment for COVID-19.

O= Opportunity: The number of contacts of the infected person during the duration of the infection. If people are isolated (no contacts), then community spread does not occur or is minimised. This is achieved through social distancing.

T= Transmission Probability: The chance an infection is spread to a contact, hence the need to eliminate physical contact and hand washing.

S= Susceptibility: The chance a contact will develop the infection and become infectious themselves. We are all susceptible to COVID-19. Susceptibility is usually taken care of by vaccines, which we do not have for COVID-19.

Another important number for understanding diseases is the Case Fatality Rate (CFR): What percentage of people who have a disease die from it? On one extreme, we have rabies, which has a 99 percent fatality rate if untreated. On the other hand, is the common cold, which has a relatively high reproductive number but is almost never fatal. At the time of writing this, the crude case fatality rate for COVID-19 was 5.3 percent. I am calling it crude because thus far, testing has been selective. If testing protocols were to be expanded, this value will probably drop to 1 percent or less. But we will, however, work with the worst-case scenario for now.

In the case of the COVID-19, exponential growth will occur in the disease rate in humans as long as there is at least one infected person in the population pool, regular contact between infected and uninfected members of the population occurs, and there are large numbers of uninfected potential hosts among the population.

Which brings us to the term ‘doubling time’, which just means in this situation that cases/deaths will double in a given amount of time. Doubling rate in the United States of America has been reported to be three days, while China has managed to spread it out. And if the numbers from China are to be believed, they are now at six days. The longer the doubling time, the better.

One last terminology I will touch on is Herd Immunity, which simply means when a significant part of a population has become immune to a disease agent, its spread stops naturally because they are not enough susceptible people for efficient transmission. For COVID-19, immunity would come through getting the disease, assuming that it confers life-long immunity.

So what strategies do we have?

Do nothing

Based on the data we have from other countries, the reproductive number of COVID-19 is 2.5. That means, the population of people that will be infected to achieve herd Immunity is: 1-1/R0, equal to 60 percent. This translates to more than 28 million Kenyans getting it. Moreover, 80 percent (approximately 22 million people) of the population will have a mild disease or be asymptomatic. Another 14 percent (approximately 4 million people) will be in severe condition and may need hospitalisation, while 6 percent (approximately 1.7 million people) of Kenya’s population will be critical and may need intensive care facilities.

Going by case fatality rate of 5 percent, it means approximately 1.4 million Kenyans will die if we do nothing. I chose to stick with the global case fatality rate of 5 percent because even though we have a youthful population, we grapple significantly with both communicable – AIDS, Tuberculosis, malaria, pneumonia etc., and non-communicable illnesses. Furthermore, a majority of the population lives in squalid conditions and is prone to other competing illnesses. And to add salt to injury, as a country, we are still battling malnutrition and anaemia.

Doubling of new infections in the United States of America is happening every three days. This means the numbers will double ten times in a month. Though we have yet to reach the exponential phase, a quick back-of-the-envelope analysis places Kenya, with its current infection rate at 122, indicates the number of people with COVID-19 will double ten-times one month from today. The numbers will be compounded the longer we do nothing and the effects will be fatal to say the least.

Do something

Since there are no antiviral medications for COVID 19 and no vaccine, we must rely on non-pharmaceutical interventions like social distancing and eliminating physical contact.

The impact of early and widespread social distancing is flattening the curve. The flattening minimises overwhelming the healthcare facilities and their resources, which is good in the short run, but lengthens the duration of the epidemic in the long run. If the health system becomes overwhelmed, the majority of the extra deaths may not be due to coronavirus but to other common diseases and conditions such as heart attacks, strokes, trauma, bleeding, and other such diseases that are not adequately treated.

Too, if large numbers of Kenyans were to get very sick and start flooding into hospitals and health care facilities, our system will undergo a severe stress test. Our health system could be overrun in a very short period of time. Thus, figuring out how to plan for a massive influx of patients is one of the hardest parts of preparing for health emergencies, and it has yet to be adequately dealt with in Kenya.

If large numbers of Kenyans were to get very sick and start flooding into hospitals and health care facilities, our system will undergo a severe stress test. Our health system could be overrun in a very short period of time.

“Surge capacity” management is one of our biggest weaknesses, particularly at a time when we have shortages of health workers, and a weak supply chain management system. The national and county governments have spent very little on health care, choosing to focus on capital expenditure where there is something for them to ‘’eat’. Even in the course of this pandemic, health care workers are being appreciated by word of mouth but are not being protected, risking spreading this to patients, other workers, families as well as the public. The risk of COVID-19 being another nosocomial infection is very high. Indeed, the 3,000 unemployed doctors have yet to be absorbed into the healthcare system to mitigate this crisis, but I digress.

Mitigation

Here the focus is to slow the growth of the epidemic. Instead of having it double every three days, you put interventions in place to slow it down to double every seven days. This will ease the demand for health care services and give you breathing room. Interventions here include hospital isolation of confirmed cases, home isolation of suspect cases, home quarantine of those living in the same household as suspect /confirmed cases, and social distancing of the elderly and others at most risk of severe disease.

This has the potential to reduce infections and deaths by as much as 60 percent, and prevent the economy from collapsing completely the numbers will drop from 28 million infections with no mitigation, to approximately 11.2 million, and 560,000 deaths if we infer to the case fatality rate of 5 percent.

Suppression

With suppression, you want to reduce the reproductive number to below 1, hence stopping transmission. This is what we are doing now. Travel restrictions, social distancing, school closures, curfews, stopping mass gatherings. The only strategy that we haven’t adopted so far is sheltering in place, what people like to refer to as lockdown. The problem with this strategy is that it has enormous economic and social impacts. And as long as we live in a global village, there is a great risk of recrudescence especially when you open the borders. This means you have to maintain the strategies until a vaccine is discovered and you have vaccinated at least 60 percent of the population, or at least until a cure is found. We are probably 6-12 months away from a solution considering how clinical trials are being fast-tracked. There is the option of relaxing the strategies occasionally when the reproductive number is low, but this means you must have a meticulous method of disease surveillance to pick up recrudesce early.

How do we balance public health vs. economic consequences?

The bubonic plague of medieval Europe, the Spanish flu of 1918, SARS, H1N1 Swine flu and other infectious diseases have shaped the political economy of the world and so far, all evidence indicates that COVID-19 will do the same.

We must, now, grapple with philosophical issues such as how much economic value we are willing to lose to save a human life.

As a public health practitioner, I decree that saving life is more important than social and economic effects. I think there must also be a delicate political balance to be considered and policymakers should reflect whether they are doing more harm than good.

When making decisions, policymakers often use what’s called the Value of a Statistical Life (VSL) to set an upper bound on how much you can impose on people in order to save lives. But if policymakers assigned an infinite economic value to each life, they would spare no expense and be fearless in imposing any inconvenience.

Information

At a time when everyone needs better information, from disease modelers and governments, we lack reliable evidence on how many people have been infected with COVID-19. Better information is needed to guide decisions and actions of monumental significance to monitor their impact.

The data collected so far is unreliable. Given the limited testing to date, some deaths and probably the vast majority of infections due to COVID-19 are being missed. We can’t access if we are failing to capture infections by a factor of three or 300.

As a public health practitioner, I decree that saving life is more important than social and economic effects. I think there must also be a delicate political balance to be considered and policymakers should reflect whether they are doing more harm than good.

Too, we don’t know what factors are being modeled. Kenya, for instance, is a diverse country with densely populated counties like Nairobi, and less densely populated like Turkana. A one-size-fits-all model won’t work. The modeling models developed need to be county-specific, and interventions need to be more nuanced and contextual. Of course, the chain of command should remain at the ministry of health but with an aggressive inter-governmental coordination prescribing strategies for each county.

This is the time to fully implement the spirit of the 2010 constitution and bring in the devolved units, as health is a function of counties. It is here that strategies such as how will “sheltering in place” work for pastoralism communities be enforced? What strategies need to be considered for the rural areas where the majority of their populations are the elderly?

The overarching idea is to tailor-make a range of policy mixes suitable for the Kenyan context.

Is Kenya getting right?

Based on the numbers I have shared above; I would say it’s a mixed bag. Social distancing is yielding fruit, however, we need a scientifically determined threshold on when these can be relaxed or re-introduced. Indeed, there must be a robust health surveillance system in place, which has to be county-specific. The success of the ongoing strategies to mitigate community transmission will depend on how Kenyans collectively respond to the plea of physical distancing and hygiene.

Still, we have to do more. First, we are not testing enough. I posit that we should partner with certified private laboratories to scale-up testing. We must acquire testing kits that can be used on Genexpert platforms that were provided by PEPFAR and are available in all counties.

I can’t emphasise enough about testing.

You test, isolate and trace to minimise community spread. Without this, we are swimming blind. Secondly, we are not protecting our health care workers. They are the first-line workers and are at the greatest risk of acquiring COVID-19, transmitting it to other patients, as well as to the community.

Finally, there hasn’t been a pandemic control that has succeeded without social capital. How Kenya and Africa will deal with this pandemic will squarely depend on the strength, resilience and adaptability of our social capital to weather the storm.

Disclaimer: The opinions expressed here belong to the author, and do not purport to reflect the opinions or views of the MOH or other bodies involved in COVID-19 response.

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Controlling COVID-19: Lessons from East Asia

As authorities the world over restrict the movements of their populations, and governments benchmark their responses on the worst affected regions, there are lessons to be learnt from South Korea which has eschewed lockdowns in favour of early detection through mass testing, contact tracing and treatment.

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Controlling COVID-19: Lessons from East Asia
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By the third week of March 2020, the number of COVID-19 deaths in Italy had overtaken the number of deaths in China. Authorities all over the world are restricting the movements of their populations as part of efforts to control the spread of COVID-19.

For the time being, more and more governments are benchmarking their responses on the very worst outbreaks in Wuhan and northern Italy. But lockdowns inevitably have adverse economic impacts, especially for businesses, particularly small ones heavily reliant on continuous turnover. Are there other ways to bring the virus under control without lockdowns?

South Korean lessons?

The Republic of Korea, or South Korea, is one of a handful of mainly East Asian economies that have dramatically reduced the number of COVID-19 cases as well as related deaths. On 29 February 2020, the country saw 909 newly confirmed cases.

By 25 March, the number of newly confirmed cases fell to 100. It has gone from having the second-highest rate of infection globally to eighth place, behind China, Italy, United States, Spain, Germany, Iran and France, all with varying rates of testing.

For now, South Korea has checked the spread of infections. It has managed to slow the spread of COVID-19 without imposing lockdowns, even in its most infected city, Daegu. How have they responded differently to the crisis?

Korean-style pandemic management

The key to South Korea’s response has been mass testing. South Korea has done the most COVID-19 tests by country, with over 300,000 tests as of 20 March 2020, or over 6,000 per million inhabitants. Germany, in second place, had done 167,000 by 15 March 2020, or 2,000 per million.

The infected who show no symptoms (i.e., the asymptomatic) or only have mild symptoms are more likely to transmit the virus to others. As such, undetected cases are more likely to spread infection, mass testing has checked the spread of the virus by identifying and breaking its chains of transmission.

The median incubation period, between infection and symptoms first appearing, is about five days, during which time asymptomatic individuals may unknowingly infect others. Mass testing detects infections early, so that individuals can self-isolate and get treatment instead of infecting others.

South Korea had built up its testing capabilities following the Middle East Respiratory Syndrome (MERS) outbreak in 2015. It was thus prepared with test kits and facilities for rapid development, approval and deployment in case of future outbreaks.

After South Korea confirmed its first case of Covid-19 on 20 January 2020, hundreds of testing facilities, ranging from drive-through kiosks to hospitals and local clinics, quickly became available across the country.

Trace, test, treat

The tests are mainly free for those whom medical professionals suspect need to be tested, e.g., if they recently returned from China. The tests are also free of charge for “secondary contacts” of a person known to be infected or to belong to an at-risk group.

Others who do not belong to these categories, but wish to be tested, are charged 160,000 Korean won (about US$130), but the amount is reimbursed if the result is positive, with any treatment needed paid for by the government.

Mass testing detects infections early, so that individuals can self-isolate and get treatment instead of infecting others

Another legacy of the MERS outbreak is that the government has the legal authority to collect mobile phone, credit card and other data from those who test positive for contact tracing efforts. China, too, has made use of artificial intelligence and big data to improve contact tracing and manage priority populations.

Although this has sparked debates over privacy concerns, South Korea’s proactive testing and contact tracing methods have also been praised by the World Health Organization (WHO), which is encouraging other countries to apply lessons learned in South Korea, China and elsewhere in East Asia.

Path not taken

Although South Koreans are banned from entry into more than 80 countries around the world, its authorities have only restricted incoming travellers from China’s Hubei province, whose capital city is Wuhan, and Japan, due to bilateral political tensions.

Special procedures require visitors from China and Iran to use smartphone applications to monitor for symptoms such as fever. As Europe has become the new epicentre of the pandemic, all visitors from Europe are now being tested for Covid-19, with those staying long-term quarantined first.

The Korean Centers for Disease Control and Prevention (KCDC) continue to urge people to practice social distancing and personal hygiene. Mass gatherings are discouraged, and employers encouraged to allow employees to work remotely. But no lockdown has been imposed, and South Korea has not imposed nationwide restrictions on movements of people within its borders.

Learning the right lessons

Besides South Korea, the WHO has also praised China for its Covid-19 response, which has rapidly reduced new cases, besides helping other countries with their efforts. More and more countries are restricting freedom of movement through lockdowns, citing China’s response in Wuhan.

However, Bruce Aylward, who led the WHO fact-finding mission to China, notes,

“The majority of the response in China, in 30 provinces, was about case finding, contact tracing, and suspension of public gatherings—all common measures used anywhere in the world to manage [infectious] diseases. The lockdowns people are referring to… [were] concentrated in Wuhan and two or three other cities . . . that got out of control in the beginning . . . [T]he key learning from China is . . . all about the speed. The faster you can find the cases, isolate the cases, and track their close contacts, the more successful you’re going to be”.

China and South Korea are now primed to detect and respond rapidly, which may make all the difference in preventing a new wave of infections. This is not to say that lockdowns are ineffective; we will soon know whether such measures in countries like Italy will succeed.

The faster you can find the cases, isolate the cases, and track their close contacts, the more successful you’re going to be

The South Korean and Chinese experiences suggest that resources should be concentrated on rapid and early detection, isolation and contact tracing, protecting the most vulnerable, and treating the infected, regardless of means, instead of mainly relying on strict lockdown measures.

This article was first published by inter press service news agency. The authors are both associated with Khazanah Research Institute but do not implicate KRI with the views expressed here.

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