It’s Friday and that means a new blog post.
Can’t believe January has flown by so quickly! Have all your new year resolutions set in? Have you stuck to your budget? Will ‘njaanuary’ leak into February? Are these questions too loud?
Either way, the new year bliss is wearing thin and most of us are back into the throws day-to-day life. As we settle into our 2021 routines and try to remain on track with our 2021 goals, it’s important to ask, what curveballs can we expect this year as a result of last?
Towards the end of last year, we combined all the financial highlights of 2020 into a long-form timeline. Safe to say that both local and global economies experienced a lot of volatility last year. So what does that mean for this year? Does a new year grant us an automatic reset? (That would be nice). Or does the start of a new year mean weighing the fallouts of the previous one?
Sadly in this case it means the second. But that’s not always a bad thing. Anticipating is far better than being caught unaware. So let’s get into it. What financial aspects of 2020 can we expect to see in 2021?
One of the fallouts of the pandemic was sector-wide funding cuts. As countries went into social-protection mode, monies that would otherwise be allocated to various funding initiatives became unavailable.
For example, the Kenyan government is due to decrease public university funding by US $400 million as a result of the economic impact of the pandemic on the country.
Funding cuts could mean a number of things depending on the sector affected. Reduction in services, loss of jobs, underdevelopment and so many other things. Keep an eye out for this one.
Employment in 2020 was nightmarish to say the least. According to a recent study published by the International Labour Organisations, 93% of the world's workers live in countries that experienced some kind of workplace closure. When you put this into the context of a developing country like Kenya, where the informal sector represents 83.1 percent of the country's total labour force, it can be quite catastrophic.
So when the majority of a country’s workers are unable to go to work for a long period of time, will the start of a new year automatically reset this? Unfortunately not. But there is some light. When Covid-19 struck in early 2020, a lot of governments were just scrambling trying to figure out the virus. A year later, we’re smarter and more equipped, so as economies slowly open up, and workplaces and government educate and implement more social distancing, we can expect to see a steady increase in job availability.
Following the sharp decline in employment, in September of 2020, the number of daily business registration rose by 95%. Kenyan hopped into survival mode and decided that entrepreneurship was the way! We might actually see this trend continue into 2021. According to the Kenya Trading Economics, unemployment in the country increased to 10.40 percent in the second quarter of 2020 from 5.20 percent in the first quarter of 2020. In the long run the unemployment rate is projected to increase to 12.3 percent in 2021 and decrease to 9.8% in 2022 as the economy stabilises. Kenyans who lost their jobs in 2020 and are still holding out on finding jobs in 2021 might try their luck by starting a business. Maybe the same can be said to other developing economies around the world?
That’s it from me. What financial aspects of 2020 can we expect to see in 2021?