Small businesses on the brink as Covid-19 effects continue to bite

By Remie Otieno

Small businesses will take a long time to recover from the effects of Coronavirus pandemic, according to a new study by research firm GeoPoll.

In its findings, the report’s drafters note that, a substantial number of business owners in Kenya, particularly Micro, Small, and Medium Enterprise (MSMEs), are still unsure of their businesses survival, two years since Covid-19 erupted in March 2020.

The Africa MSME Pulse Survey, which put questions to a total of 312 MSMEs across three different African markets including Kenya’s 102, further found that more businesses will continue to scale back operations, including laying off employees in spite of the pandemic appearing to be moving to endemicity in most parts of the world.

“In our study, three out of every four respondents say their business was negatively impacted by the pandemic. The percentage is highest in Kenya at 81 percent.

This follows previous GeoPoll studies in which Kenyans were most likely to report losses in personal income and employment due to the pandemic,” reads the report in part.

A majority of the MSMEs surveyed in the study – which is about 57 percent, had to lay off, halt work, or reduce salaries for employees in the past two years.

The trend remained consistent across the three countries including Nigeria and South Africa, with the construction industry for instance hit particularly hard, with 80 percent saying they had to take adverse hiring measures.

“With less income coming in, many construction clients likely halted long term projects over short-term uncertainties,” it noted.

More than 70 percent of the MSMEs, according to the report conducted last December were forced to close their businesses at least temporarily due to the pandemic, of which only 17 percent have fully resumed normal operations.

The largest percentage, 42 percent, shut down temporarily and have opened at limited capacity.

Despite many businesses resuming work to some extent, employment opportunities remain scarce as MSMEs try to recover lost time and revenue, it continued.

Overall, GeoPoll found that 43 percent of the MSMEs say they are not likely to hire or rehire staff in the next three months (between January 2022 and March 2022), with only a quarter saying they are very likely to fill positions.

Those fears are now being compounded by the looming August 9 general elections – a typical period employers tend to freeze hiring due to uncertainty of the polls outcome.

Access to finance, unfriendly taxation system and general economic conditions also heightened by the Russia-Ukraine war are also some of the factors choking the continuity of such businesses.

In Kenya, MSMEs are defined as enterprises that employ between 1 and 99 employees and in most cases micro enterprises have less than 10 employees; small enterprises have 10 to 49 employees while medium sized enterprises have 50 to 99 employees.

The segment plays a pivotal role in Kenya’s economy – contributing over 90 per cent of total labor force in the country and playing a key role in poverty reduction and economic development.

It is also a segment regarded as a rich source of innovation, competitiveness, goods and services, and entrepreneurial skills with most corporations both local and multinationals known to tap such talents at their nascent stages of their incubation, often from novelty hubs and colleges.