In Summary
  • COVID-19 is rippling across China which is at the heart of many global supply chains.
  • Several airlines have placed bans on flights to China for February, until further notice and many global events have been postponed.
  • The impact of this may last much longer than coronavirus, and not just with events.
  • The bigger concern is that Corona might spread to weaker countries, which may not have robust health systems to manage it, including some in Asia and Africa that have strong trade ties with China.

About five years ago I was invited to a prestigious event – the launch of a new global product that was taking place in a Middle East country. The invitation came from someone I knew at the corporation, with a tentative itinerary of the ceremony, visa application details, and a request for me to pick my preferred travel dates.

A few days later, the event was rescheduled, but no new invitation came. When I pressed for an update on the status of my attendance, I was advised that the host country had issued a visa freeze on some countries owing to the “Ebola situation”. I was stunned. Yes, Ebola was troubling Western Africa, but it was in countries that were much further from Nairobi than the city where the launch event was.

As we leant later, Ebola did have a devastating effect on people, countries, and companies. Mbuvi Ngunze then CEO of Kenya Airways, described the outbreak of Ebola as one of three almost simultaneous events along with the fire at Jomo Kenyatta Airport and the Westgate attack that starved the airline of passenger revenue when their new fleet was arriving thereby triggering a downward spiral that they are still trying to emerge from.

Today the world is in a similar situation. This time it is Corona Virus, known as COVID-19, which was first identified in Wuhan, China. Last year, President Xi Jinping had warned senior government officials to be on guard against “black swans” or “grey rhinos” that could pose threats to the Communist Party rule over China at a time when its economy was slowing.

My friend Aly Khan Satchu has been writing about this possibly being a black swan moment. Based on a theory by Nassim Nicholas Taleb, black swan events can have unpredictable or extreme outcomes, and Taleb has written about the risk of a virus spreading in a “hyper-connected” world in which there is a great amount of travel.

And now COVID19 is rippling across China which is at the heart of many global supply chains. For many global companies, China is where they get their raw materials and it is also their biggest export market. While the outbreak came during the long holidays in China, a time of low manufacturing activity, and when companies had already stocked up on ample supplies, that period is ending soon.

POSTPONED

But several airlines have placed bans on flights to China for February, until further notice. An aviation publication reported that Chinese airlines have grounded 1,215, of the 4,145 aircraft in their fleets, with state-owned China-Eastern and China-Southern each parking a third of their planes.

This week, the China Grand Prix, set for April 19 was postponed. Other events including the Canton Fair, China’s biggest trade fair and which some Kenyan banks arrange for their business customers to attend, have been postponed. This week also saw the cancellation of one of the most influential telecommunications events, the Mobile World Congress in Barcelona, after several big exhibitors and guests had pulled out.

The impact of this may last much longer than coronavirus, and not just with events. There's a cruise ship stuck in Japan with 3,700 passengers in quarantine. And the USA has imposed a ban on admitting any non-Americans into the country who had been in China after January 27. There have also been discussions on the impact of COVID-19 on the 2020 Olympic games scheduled to start on July 24 in Japan, which has the most airline connections with China.

For now, China is working hard to cure Corona and to convince the world that they have it under control in Wuhan City, Hubei Province, and the greater China including knowledge of travellers who passed China in recent weeks. The authorities have built a few 1,000-bed hospitals in two weeks, feats of serious engineering. Movement across the country has been restricted and people going back to work can only access their workplaces after extended rests and observation at their homes.

The bigger concern is that Corona might spread to weaker countries, which may not have robust health systems to manage it, including some in Asia and Africa that have strong trade ties with China.

At a press briefing in Nairobi recently, China’s ambassador to Kenya, Wu Peng, gave the global update from his Government which was that 59,885 people had been confirmed as having the disease, 1,368 had passed away and 6,000 had been cured. The story of COVID9 is still unfolding, as are its effects across the world.