The short-term economic effects of COVID-19 on low-income households in rural Kenya: An analysis using weekly financial household data.

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From: World Development(Vol. 138)
Publisher: Elsevier Science Publishers
Document Type: Report; Brief article
Length: 352 words

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Abstract :

Keywords COVID-19 pandemic; Economic effects; Fixed-effects regressions; Risk-coping; East Africa; Kenya Highlights * Kenya installed response measures as soon as the first COVID-19 case was detected. * Our weekly financial transaction data track the socio-economic impacts in detail. * The lockdown reduced income from work, gifts and remittances by about one-third. * Food spending remained at pre-COVID levels, school and transport spending decreased. * To cope with lower cash inflows, households reduced their social support to others. Abstract This research assesses how low-income households in rural Kenya coped with the immediate economic consequences of the COVID-19 pandemic. It uses granular financial data from weekly household interviews covering six weeks before the first case was detected in Kenya to five weeks after during which various containment measures were implemented. Based on household-level fixed-effects regressions, our results suggest that income from work decreased with almost one-third and income from gifts and remittances reduced by more than one-third after the start of the pandemic. Nevertheless, household expenditures on food remained at pre-COVID levels. 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, in line with the school closures and travel restrictions. Thus, despite their affected livelihoods, households managed to keep food expenditures at par, but this came at the cost of reduced informal risk-sharing and social support between households. Author Affiliation: (a) Vrije Universiteit, Amsterdam Institute for Global Health and Development and Tinbergen Institute, Netherlands (b) Vrije Universiteit, University of Amsterdam, Amsterdam Institute for Global Health and Development and Tinbergen Institute, Netherlands (c) Amsterdam Institute for Global Health and Development, Netherlands (d) African Population and Health Research Center, Kenya (e) African Population and Health Research Center (Kenya) and CREM, UMR CNRS 6211, University of Rennes 1, France * Corresponding author. Byline: Wendy Janssens [w.janssens@vu.nl] (a), Menno Pradhan [m.p.pradhan@vu.nl] (b), Richard de Groot [r.degroot@aighd.org] (c,*), Estelle Sidze [esidze@aphrc.org] (d), Hermann Pythagore Pierre Donfouet [hdonfouet@aphrc.org] (e), Amanuel Abajobir [aabajobir@aphrc.org] (d)

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Gale Document Number: GALE|A648797342