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Satchu's Rich Wrap-Up
Tuesday 27th of October 2020

This time around, the market is responding to a clearer external threat. The Covid-19 numbers aren’t good. @bopinion @johnauthers

People testing positive now are far more likely to survive than they were in March or April, and the death rate continues to decline. But statistics on hospitalization make clear that the disease is meaningfully recurring, in a way that cannot be dismissed as an artefact of more testing.

The problem is greater in Europe, where even Germany — the most successful major European country in dealing with the pandemic so far — is seeing a rise in hospitalizations. 

In Germany’s case, this is only a second wave, which remains much smaller than the first. 

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As if on cue, the “Covid fear” index, which shows the relative performance of the S&P 1500 food retailers sub-index compared to the S&P 1500 hotels resorts and cruise lines index, jolted back upward on Monday:

The hotels index had its worst day since June. Food retailers have once again outperformed by a full 100% for the year. This suggests it is the immediate fear of direct disruption from Covid-19 that is moving markets.

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No sector has been worse hit than travel, leisure and tourism, for obvious reasons. The U.S. hotels sector is down 40% for the year. @bopinion @johnauthers
Tourism, Travel & Transport

This is a discriminating virus. In the corporate world, the identity of its worst victims, and of those who survive unharmed, can be surprising. No sector has been worse hit than travel, leisure and tourism, for obvious reasons. The U.S. hotels sector is down 40% for the year. Globally, the hotels, restaurants and leisure sector is still down by 10%. But there is great variation within the leisure sector. Remarkably, the S&P 1500 restaurants sub-index has outperformed the S&P 500:

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A Shocking Find in a Neanderthal Cave in France @TheAtlantic

In February 1990, thanks to a 15-year-old boy named Bruno Kowalsczewski, footsteps echoed through the chambers of Bruniquel Cave for the first time in tens of thousands of years.

The cave sits in France’s scenic Aveyron Valley, but its entrance had long been sealed by an ancient rockslide. 

Kowalsczewski’s father had detected faint wisps of air emerging from the scree, and the boy spent three years clearing away the rubble. 

He eventually dug out a tight, thirty-meter-long passage that the thinnest members of the local caving club could squeeze through. 

They found themselves in a large, roomy corridor. There were animal bones and signs of bear activity, but nothing recent. 

The floor was pockmarked with pools of water. The walls were punctuated by stalactites (the ones that hang down) and stalagmites (the ones that stick up).

Some 336 meters into the cave, the caver stumbled across something extraordinary—a vast chamber where several stalagmites had been deliberately broken. 

Most of the 400 pieces had been arranged into two rings—a large one between 4 and 7 metres across, and a smaller one just 2 metres wide. 

Others had been propped up against these donuts. Yet others had been stacked into four piles. Traces of fire were everywhere, and there was a mass of burnt bones.  

These weren’t natural formations, and they weren’t the work of bears. They were built by people.

Recognizing the site’s value, the caver brought in archaeologist Francois Rouzaud. 

Using carbon-dating, Rouzaud estimated that a burnt bear bone found within the chamber was 47,600 years old, which meant that the stalagmite rings were older than any known cave painting

It also meant that they couldn’t have been the work of Homo sapiens. Their builders must have been the only early humans in the south of France at the time: Neanderthals.

The discovery suggested that Neanderthals were more sophisticated than anyone had given them credit for. 

They wielded fire, ventured deep underground, and shaped the subterranean rock into complex constructions. Perhaps they even carried out rituals; after all, there was no evidence that anyone actually lived in the cave, so what else were the rings and mounds for?  

Rouzaud would never know. In April 1999, while guiding colleagues through a different cave, he suffered a fatal heart attack. 

With his death, work on the Bruniquel Cave ceased, and its incredible contents were neglected. They’ve only now re-entered the limelight because Sophie Verheyden went on holiday.

A life-long caver, Verheyden works at the Royal Belgian Institute of Natural Sciences, where she specializes in stalagmites. 

She treats them as time capsules, using the chemicals within them to reconstruct the climate of past millennia. 

So when she learned about Bruniquel Cave, while visiting the region on holiday and seeing a display at a nearby castle, she had only one thought: Why hadn’t anyone dated the broken stalagmites themselves?”

She knew that Rouzaud’s date of 47,600 years was impressive but suspect. Carbon-dating is only accurate for samples younger than 50,000 years, so the Bruniquel material was hitting the technique’s limits. 

They could well have been much older. To get a better estimate, Verheyden assembled a team including archaeologist Jacques Jaubert and fellow stalagmite expert Dominique Genty. 

In 2013, they got permission to study the site and crawled into it themselves. “I’m not very big, and I had to put one arm before me and one behind to get through,” says Verheyden. “It’s kind of magical, even without the structures.”

After drilling into the stalagmites and pulling out cylinders of rock, the team could see an obvious transition between two layers. On one side were old minerals that were part of the original stalagmites; on the other were newer layers that had been laid down after the fragments were broken off by the cave’s former users. 

By measuring uranium levels on either side of the divide, the team could accurately tell when each stalagmite had been snapped off for construction.

Their date? 176,500 years ago, give or take a few millennia.

“When I announced the age to Jacques, he asked me to repeat it because it was so incredible,” says Verheyden. 

Outside Bruniquel Cave, the earliest, unambiguous human constructions are  just 20,000 years old. 

We know that 400,000 years ago, some ancient hominins chucked their dead into a cave at Sima de los Huesos, but there’s no evidence of the careful constructions in Bruniquel.

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'Dreams of Africa' taken by Lee-Anne Robertson in aid of Mara Elephant Project @GreatestMara

"I saw this lion obscured by the tall grass and it was so dreamy I decided to try capture the essence of Africa. It reminded me of how Africa and it's great wonders sometimes float across my dreams" - 'Dreams of Africa' taken by Lee-Anne Robertson in aid of Mara Elephant Project

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"This 'put up or shut up' strategy is quite risky. It may not elicit the response the US wishes, unless confrontation is what it wants. @ChinaPlusNews @SCMPNews
Law & Politics

The US is testing China’s red lines in the South China Sea. What does it hope to achieve?

The US seems to be pushing China to stand down from its claims and occupations or defend them militarily. This ‘put up or shut up’ strategy is risky – unless confrontation really is the aim

US-China relations have plunged to their lowest level in decades and both powers are on the brink of a clash in the South China Sea. 

Yet, despite the danger and delicacy of the situation, and vehement Chinese warnings, the US is ramping up its military activities and testing China’s “red lines” and patience.

Why is the United States risking confrontation? Maybe China hardliners in the Trump administration think it will help the president’s re-election bid. 

Or perhaps, this is “normal” military posture around a distracting presidential election to ensure China does not miscalculate.

Whatever the reason, the US is pushing China’s buttons and China is responding – making a clash increasingly probable.

Provocative US military activities include increased spy plane probes, repeated aircraft carrier strike group deployments, more military support for Taiwan, and freedom of navigation operations, which are its main antagonistic action.

Earlier this month, the US undertook such an operation – its eighth this year – near the Chinese-controlled Paracel Islands, a particularly sensitive area where China has a major base and the administrative capital for its claimed South China Sea possessions. 

The US action was also seen as supportive of Vietnam’s stepped-up campaign against China for the islands, which it also claims.

This comes after US Secretary of State Mike Pompeo said on July 13 that the US “will support countries all across the world who recognise that China has violated their legal territorial claims”, vowing to “use all the tools we can”.

US FONOPs purport to demonstrate and protect freedom of navigation and to challenge claims that violate that principle. 

But the US is disingenuously conflating freedom of commercial navigation with the freedom of military vessels to intimidate and spy on countries – in this case, China.

The US knows China has never interfered with commercial navigation freedom, but it continues the charade to aggravate China and win support in the region and beyond.

The US destroyer John S. McCain, which took part in the latest operation, is part of the Ronald Reagan aircraft carrier strike group, which recently entered the South China Sea for the third time this year. 

This came right after the USS Barry sailed through the Taiwan Strait into the South China Sea – the 10th such transit of a US warship this year

Such warship transits, which the US views as perfectly legal, tread close to China’s “red line” claim of sovereignty over Taiwan – especially in conjunction with US arms sales to Taiwan and a visit by a US cabinet official. 

The US Navy said the transit showed “US commitment to a free and open Indo-Pacific”, the same vague verbiage it uses to justify other provocations.

China vehemently protested against the McCain freedom of navigation operation, which the People’s Liberation Army called a “blatant navigation hegemony and military provocation” that “seriously violated China’s sovereignty and security interests, and gravely jeopardised peace and stability in the South China Sea”.

Other opportunities for US military involvement are looming. The Philippines has declared it will restart petroleum exploration on Reed Bank – which China also claims – and will defend its right to do so. 

The US has reassured its ally, the Philippines, that it will come to its aid if its forces are attacked by China in the South China Sea. The stage is set for a confrontation.

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Russia knocking Turkish drones from Armenian skies @asiatimesonline
Law & Politics

The electronic warfare system is known as “Belladonna”, a poisonous plant that gets its name from Renaissance women who used its extract for tinctures to dilate the pupils of their eyes, ostensibly to make them more attractive.

While Belladonna translates to “beautiful woman” in English, in Russian it has a second meaning: it is the name of a Russian electronic jamming system now credited with knocking out at least nine Turkish Bayraktar armed drones used by Azerbaijan to target Armenia. 

If true – and no one has denied it – the system is now operating around the sensitive Russian military base at Gyumri in Armenia, far from the Nagorno-Karabakh conflict area.  

In Russian, Belladonna is known as “Krasukha.” The Krasukha jamming system was rushed to Armenia to counter the successful use of both armed drones such as the Bayraktar and suicide drones like the Israel-made loitering munition known as Harop.

The Turks have heavily advertised the success of Bayraktar in three theaters – Syria, Libya and now in the Nagorno-Karabakh conflict. Turkey and Azerbaijan have released numerous “kill videos” of the drone blowing up tanks, armored vehicles and trucks – and killing many soldiers in the process.

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The Third Wave of COVID-19 in the U.S. Is Officially Worse Than the First Two @TIME
Minerals, Oil & Energy

As of Oct. 24, there was a weekly average of 23.0 infections per 100,000 residents, up from 20.5 on July 19 and ticking rapidly upward. The country also set a new single-day record on Oct. 23 with 83,757 new cases.

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.@Rabobank : "A Dangerous Moment" @zerohedge
World Of Finance

Meanwhile, the WHO has warned that some countries in the northern hemisphere are facing a “dangerous moment.” This assessment applies to a number of EU countries, where political leaders are trying to protect their citizens by using various restrictions to flatten the coronavirus curve. Spain declared a state of emergency and imposed a curfew. Italy has tightened restrictions as well after new infections rose to a record high of 21,273 on Sunday. France reported record new infections for the fourth consecutive day. Last week the French government announced an extension of the curfew to 54 départements, covering some 2/3 of the country.

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Arundhati Roy: ‘The pandemic is a portal’ – The Open Question is a Portal to whence.

What we know is that #COVID19 [is] unlike the flow of capital [and that] this virus seeks proliferation, not profit, and has, therefore, inadvertently, to some extent, reversed the direction of the flow.

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Currency Markets at a Glance WSJ
World Currencies

Euro 1.1831

Dollar Index 92.883

Japan Yen 104.722

Swiss Franc 0.90648

Pound 1.303650

Aussie 0.713795

India Rupee 73.7475

South Korea Won 1125.650

Brazil Real 5.6248

Egypt Pound 15.710000

South Africa Rand 16.172250

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22 MAR 20 :: The Price of Crude Oil is perfectly correlated to the #COVID19 Sudden Stop

What’s certain is that the whole global economy has been hit by an insidious, literally invisible circuit breaker. @asiatimesonline

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South Africa may use a wealth tax to fund its budget, projected to record the biggest shortfall since 1914, as the economy tries to recover from its longest recession in three decades @BBGAfrica

South African Finance Minister Tito Mboweni will have to find money to help the nation’s economy recover from its longest recession in three decades and bail out state companies in a budget that’s projected to record the biggest shortfall since 1914.

Mboweni will present the government’s revised spending framework for the next three years on Wednesday, four months after a supplementary budget that was unveiled to reallocate funds to help pay for a 500 billion-rand ($31 billion) stimulus package announced by President Cyril Ramaphosa.

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African debt to China: ‘A major drain on the poorest countries’ @financialtimes @Jonthn_Wheatley @jsphctrl @neiLmunshi and @cdcshepherd

Over the past two decades, China has emerged as the biggest bilateral lender to Africa, transferring nearly $150bn to governments and state-owned companies as it sought to secure commodity supplies and develop its global network of infrastructure projects, the Belt and Road Initiative.

But, as Zambia heads for Africa’s first sovereign default in a decade and pressure mounts on other debt-burdened countries during the coronavirus pandemic, the crisis has revealed the fragmented nature of Chinese lending as well as Beijing’s reluctance to fully align with global debt relief plans.

China’s share of bilateral debt owed by the world’s poorest countries to members of the G20 has risen from 45 per cent in 2015 to 63 per cent last year, according to the World Bank

For many countries in sub-Saharan Africa, China’s share of bilateral debt is larger still.

Chinese lenders have lent money to almost every country on the continent and eight have borrowed more than $5bn apiece this century. But Beijing’s involvement in a debt service suspension initiative from the G20 group of the world’s largest economies has been slow.

“It’s frustrating,” said David Malpass, president of the World Bank, this month. “Some of the biggest creditors from China are still not participating and that creates a major drain on the poorest countries . . . if you look at the [Chinese] contracts, in many cases they have high interest rates and very little transparency.”

The DSSI offers a moratorium on repayments due on bilateral loans made by the G20’s members and their policy banks to 73 of the world’s poorest countries, spreading the repayments over four years. 

This month, it was extended to June 2021, with repayments spread over six years.

China is so far the biggest single contributor to the DSSI, suspending at least $1.9bn in repayments due this year according to an internal G20 document seen by the Financial Times, out of roughly $5.3bn suspended by G20 members for 44 debtor countries. 

The next biggest contributors are France with about $810m and Japan with about $540m.

But the extent of China’s commitment is unclear. It was due to receive the largest amount this year of any G20 lender, with payments of about $13.4bn coming due from DSSI countries, according to the World Bank, while France and Japan were each due to receive about $1.1bn.

However, those figures do not include about $6.7bn of repayments that the IMF has said are under negotiation between Angola and three major creditors, which analysts believe to be China Development Bank, China Export-Import Bank and ICBC, another Chinese lender.

Angola, Africa’s second-biggest crude producer, has been the continent’s biggest borrower from China this century, receiving $43bn of the $143bn lent by China, according to the China Africa Research Initiative at Johns Hopkins University.

Sonangol, the state oil company, borrowed billions of dollars at commercial rates from the CDB, while the China ExIm Bank lent to the government at concessional rates. 

ExIm Bank loans are eligible for the DSSI, while Beijing counts the CDB as a commercial lender, meaning it can choose whether or not to participate. The ExIm Bank and CDB did not respond to requests for comment.

Angola’s borrowings illustrate one of the debt initiative’s major problems — China has lent to African states through a variety of organisations, meaning that information about who owes what to whom is partial and fragmented.

Ethiopia has also been one of the top borrowers, borrowing at least $13.7bn between 2002 and 2018 for everything from roads, to sugar factories, to a railway line to Djibouti. 

Over the past two years, China has pledged to restructure some of Ethiopia’s loans. “The Ethiopian government . . . has too many [Chinese] loans,” said a Chinese official in Ethiopia.

Chinese lending should be understood as a product of “fragmented authoritarianism”, said Deborah Brautigam, director of the China Africa Research Initiative. 

President Xi Jinping has committed to working with other G20 members to implement the DSSI, she noted. “That gives [Chinese lenders] a signal that they should do it, but not necessarily on the same terms.”

Chinese lenders’ domestic projects complicate matters, said Liu Ying, at Beijing’s Renmin University. “Every time China commits to relieve debt in Africa, there will be an outcry and pressure domestically from people who still say that they don't have enough to eat.”

Even as bilateral debt has risen, it still makes up only about a fifth of the debts owed by DSSI countries. 

Zambia has turned increasingly to China and international bond markets over less costly multilateral lenders. 

Its debts have quadrupled to $12bn in less than a decade, with $3bn owed to bondholders and at least that amount to China. Zambia’s bondholders question if they will be treated equally to Chinese creditors.

With the DSSI making clear the difficulty of getting all creditors working together, the G20 is preparing a “common framework” on debt restructuring. 

G20 officials hope this will ensure bilateral lenders share the burden equally and make relief conditional on borrowers seeking the same treatment from banks and bondholders. 

“It will be a proxy for China joining the Paris Club,” said one official involved in negotiations, referring to the informal group of bilateral lenders born of the debt crises of the late 20th century.

As it stands, China’s lending strategy carries risks, said Trevor Simumba, a Zambian analyst. 

“China has been using cheap secret loans to get access to African resources. China needs to rethink its strategy otherwise they will end up with a huge pile-up of debt that will be very difficult to restructure and even put many Chinese state enterprises at higher risk of default.”

For African countries, attracted by less onerous conditions on Chinese loans, “this crisis serves as a lesson”, said Yvonne Mhango, economist at Renaissance Capital. “To be more cautious about how much they borrow from the Chinese.”

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There's a $7bn increase in Zambia's private-to-private sector external debt in 2019 which is yet to be fully explained. @Markbohlund

Way bigger than any potential project financing as almost 50% of current nominal GDP. Any ideas on what is behind it? 

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In Lekki, Nigerian army removed the cameras, turned off the street lights & LED billboard and killed "over 78" #EndSARS protestors singing the national anthem…then put the dead bodies in their trucks @cobbo3

In Lekki, one of the poshest suburbs of Lagos, the Nigerian army removed the cameras,  turned off the street lights & LED billboard and killed "over 78" #EndSARS protestors singing the national anthem…then put the dead bodies in their trucks

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African money transfer firms thrive as pandemic spurs online remittances @Reuters

Having fled an economic implosion in his native Zimbabwe, Brighton Takawira was able to support his mother back home with modest earnings from a small perfume business he set up in South Africa.

Then the pandemic struck. Borders closed. The buses he had used to send his cash stopped running.

“I had to send something, even a few dollars,” said Takawira, though it meant sometimes going without bread. 

So he tried out an online remittance company on a friend’s recommendation.

He is one of many African migrants being pushed towards digital transfer services, often for the first time, during the pandemic.

This is fuelling a boom for Africa-focused money transfer companies, despite predictions from the World Bank of a historic 20% drop to $445 billion in remittances to poorer countries this year due to a pandemic-induced global economic slump.

“We saw an increase of transfers as the diaspora wanted to help their family,” said Patrick Roussel, who heads mobile financial services for the Middle East and Africa at French telecom company Orange - a dominant player in French-speaking Africa.

Like Takawira, many had to dip into savings or make other sacrifices to do so, analysts and company officials say.

The pandemic gave remittance companies an advantage over their main competition in Africa: the sprawling informal networks of traders, bus drivers and travellers used by many migrants to send money home.

“We’ve seen an influx of new customers, and we see them mainly coming to us from the informal market,” said Andy Jury, chief executive of Mukuru, the company Takawira now uses.

Jury and other industry executives say that shift is likely to last as digital remittance services are typically cheaper, faster and safer than informal networks, which are difficult for governments to regulate.

Mukuru, which focuses mainly on African remittances and allows customers to send both cash and groceries, has seen a roughly 75% acceleration in growth compared to last year.

Remittances to sub-Saharan Africa officially totalled $48 billion last year, according to the World Bank. Experts, however, say that figure tells only part of the story.

Much of the money Africans ship home via informal networks is absent from official data.

As those networks ground to a halt during lockdowns, formal money transfer businesses - particularly digital platforms - were suddenly the only game in town.

According to Kenyan central bank data, remittances to Kenya were up 6.5% though August compared to the same period last year. 

Remittance inflows to Zimbabwe were up 33% through July.

Online remittance company WorldRemit reported last week that transfers to Zimbabwe via its service had doubled over the past six months.

Azimo, a UK-headquartered remittance company whose major African markets include Nigeria, Ghana and Kenya, saw a nearly 200% increase over the expected number of new customers in April, May and June.

“I’d swap it out for no pandemic any day of the week,” Azimo CEO Michael Kent told Reuters. “But given that’s what’s happening, I think you are seeing digital adoption in financial services all over the place.”

Remittance companies got an additional boost early on in the pandemic when African central banks reduced fees and loosened limits on digital transactions, to encourage the public to use digital services to facilitate social distancing.

“I would probably agree with the World Bank that the total amount (of remittances) will go down,” said Dare Okoudjou, founder of MFS Africa. “But anyone who’s in digital would actually gain market share and see their volume go up.”

The company, which runs networks across 36 African countries to channel remittances between mobile money accounts, has seen year-on-year transaction growth of over 90% in 2020.

The industry is now at an inflection point, analysts say.

“If we can get the money flowing with less friction, it’s going to be better for everybody. That’s the silver lining,” said Timothy Ogden, managing director of the Financial Access Initiative at New York University.

Takawira, whose brother also works in South Africa, says he’s now using Mukuru each month to send cash and groceries to his 60-year-old mother in rural Zimbabwe, where inflation is topping 650%.

“My salary does not buy much ... When the boys send me money, it does help a lot ” his mother Gladys Muzira told Reuters.

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Red flag as Covid-19 deaths continue to rise @NationAfrica

Deaths from the disease rose by over 20 per cent in the past week, according to the latest African situation report, and the steady rise has continued this week.

On Sunday, the Health ministry reported 931 positive cases from a sample of 6,691, with Nairobi leading (333) followed by Mombasa and Nakuru with 95 and 85 cases respectively.

Kenya’s Covid-19 deaths have risen exponentially in the past two weeks, a trend that has health officials worried.

Deaths from the disease rose by over 20 per cent in the past week, according to the latest African situation report, and the steady rise has continued this week.

In the past three days, 32 deaths have been reported, bringing the total to 902. Six fatalities were recorded yesterday. 

“The majority of the deaths have continued to occur at facility level,” Dr Patrick Amoth, the acting Health Director-General said last week.

“There is a wide community transmission of the virus and we are having a severe form of the disease,” said Dr Amoth, sentiments echoed by Dr Ahmed Kalebi, the CEO of Lancet Kenya.

Dr Kalebi said: “The number of people getting infected with Covid-19 is higher, we are also seeing more case fatalities than before.”

According to him, there could be community deaths, a statement reiterated by Dr Bernard Muia, a public health expert.

“The data being presented by MoH has a selection bias — it is health facility-based and there could be many Covid-19 community deaths from the disease. Actually, 20 per cent of all community deaths could be from Covid-19,” said Dr Muia.

He explained the assertion, saying it is premised on death patterns during pandemics and his clinical experience having worked in rural settings.

“The upsurge could also be associated with the rate of hospitalisation, which is going up,” he said.

Dr Muia said the cases could also be going up because of poor management of the disease considering that there have been strikes by some health workers in various parts of the country.

“Industrial action should be addressed. Lack of equipment, supplies and human resource could impact negatively on patients and should also be addressed,” he said.

Yesterday, the Health ministry reported 931 positive cases from a sample of 6,691, with Nairobi leading (333) followed by Mombasa and Nakuru with 95 and 85 cases respectively.

Dr Githinji Gitahi, the Amref Health Africa Group CEO, said there is need of improving capacity in hospitals and ensuring that oxygen, which is very critical, is available. 

“Encourage people to seek healthcare early, they should stop being afraid of going to hospital,” he said, adding that there is need to look into ways of reducing stigma. 

“Increased deaths are as a result of a multiplicity of factors, the vulnerable (aged and those with existing conditions) are coming down with the increasing infections. They have become more exposed to Covid-19,” said Dr Marybeth Maritim, an infectious disease specialist at the University of Nairobi.

According to her, hospitals are not overwhelmed and cannot be blamed for the increased deaths, but they could in the next several weeks if the trend continues.

She added that there could be transmissions in hospitals, stressing the need to wear masks everywhere. 

During a recent media briefing, Dr Amoth said the rate of hospital admission had doubled in the past two months.

“Two months ago, our admission rates were around 450 in all institutional facilities. Today, the figure is 991. This means we have a widespread community transmission of the disease, more and more people are also going to health facilities

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by Aly Khan Satchu (www.rich.co.ke)
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October 2020

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