The Short-Term Economic Effects of COVID-19 and Risk-Coping Strategies of Low-Income Households in Kenya: A Rapid Analysis Using Weekly Financial Household Data

Tinbergen Institute Disucssion Paper 2020-040/V

23 Pages Posted: 1 Jul 2020

See all articles by Wendy Janssens

Wendy Janssens

VU University Amsterdam - Department of Development Economics

Menno Prasad Pradhan

University of Amsterdam

Richard de Groot

Amsterdam Institute for Global Health and Development

Estelle Sidze

African Population and Health Research Center (APHRC), Nairobi, Kenya

Hermann Donfouet

African Population and Health Research Center (APHRC)

Amanuel Abajobir

African Population and Health Research Center (APHRC)

Date Written: July 1, 2020

Abstract

This research assesses how low-income households in Western Kenya coped with the immediate economic consequences of the COVID-19 outbreak. It uses granular financial data from weekly household interviews covering six weeks before the first case was detected in Kenya to five weeks after. Our results suggest that income from work decreased with almost one third and income from gifts and remittances reduced by more than one third since the start of the pandemic. Nevertheless, household expenditures on food remained at pre-outbreak levels after preventive measures were implemented. We do not find evidence that households coped with reduced income through increased borrowing, selling assets or withdrawing savings. Instead, they gave out less gifts and remittances themselves, lent less money to others and postponed loan repayments. Moreover, they significantly reduced expenditures on schooling and transportation, related to the school closures and travel restrictions. Taken together and despite their affected livelihoods, households managed to keep food consumption at par, but this came at the cost of reduced informal risk-sharing and social support between households.

Keywords: COVID-19, lockdown, economic effects, food security, risk-coping, East-Africa, Kenya

JEL Classification: I38, O12, I15

Suggested Citation

Janssens, Wendy and Pradhan, Menno Prasad and de Groot, Richard and Sidze, Estelle and Donfouet, Hermann and Abajobir, Amanuel, The Short-Term Economic Effects of COVID-19 and Risk-Coping Strategies of Low-Income Households in Kenya: A Rapid Analysis Using Weekly Financial Household Data (July 1, 2020). Tinbergen Institute Disucssion Paper 2020-040/V, Available at SSRN: https://ssrn.com/abstract=3640340 or http://dx.doi.org/10.2139/ssrn.3640340

Wendy Janssens (Contact Author)

VU University Amsterdam - Department of Development Economics ( email )

Netherlands

Menno Prasad Pradhan

University of Amsterdam ( email )

Spui 21
Amsterdam, 1018 WB
Netherlands

Richard De Groot

Amsterdam Institute for Global Health and Development ( email )

AHTC, Tower C4, Paasheuvelweg 25
Amsterdam, 1105 BP
Netherlands

Estelle Sidze

African Population and Health Research Center (APHRC), Nairobi, Kenya ( email )

P.O. Box 10787
Nairobi, 00100
Kenya

Hermann Donfouet

African Population and Health Research Center (APHRC) ( email )

P.O. Box 10787
Nairobi, 00100
Kenya

Amanuel Abajobir

African Population and Health Research Center (APHRC) ( email )

P.O. Box 10787
Nairobi, 00100
Kenya

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