SUPPLY CHAINS IN TIMES OF CRISIS: EVIDENCE FROM KENYA'S PRODUCTION NETWORK
The ongoing pandemic put spotlight on the vulnerability of supply chains and their role for firm dynamics. This project draws on up-to-date administrative firm and transaction level data to study the impact of Covid-19 related shocks on formal firms in Kenya. The data allows the researchers to map Kenya’s formal domestic production network as well as its links to global supply chains before and during the crisis. Researchers use this set-up to quantify the indirect transmission of shocks through inter-firm linkages and the impact on firm-to-firm relationships and firm level dynamics in Kenya. The team further distinguish between the exposure to international and domestic supply chains. Finally, researchers study the relevance of the firm's pre-pandemic network position for firm level outcomes during the pandemic.
Network of formal firms in Kenya
Image description: The graph depict the network of formal firms in Kenya. Each dot represents a firm. Each line a link between two firms. Lighter colours indicate that the firm is linked to more other firms in the network.
The short-term impact of Covid-19 on employment
Employment by private sector firms fell by 16% at the onset of the pandemic between March and April 2020. In contrast, salaries for employees that continued in their job were relatively stable throughout the first half of 2020. Firm-level employment dynamics vary substantially by firm age, size, and sector, with the most severe impact concentrated in the hospitality sector. The employment records further show that except for the April 2020 period, young firms continued to grow on average amid the crisis, but their growth rates have been dampened substantially.