SMEs in Kenya are still hanging by the noose!
The partial and national lockdown since the onset of Coronavirus (COVID-19) is taking a toll on the national economy and the living conditions of most Kenyans, especially the Small and Medium Enterprises (SMEs). Since 2020 when the COVID-19 pandemic caught many SMEs unaware and unplanned. The pandemic that led to restriction of several economic activities in Kenya; key amongst them transportation, tourism and education sectors.
The ripple effect of these restrictions engrossed the SMEs, billed by analysts to be an integral growing economic pillar in Kenya.
With the most demographic group being youths, most of the affected entrepreneurs were youthful, with no reserves for savings, or a network strong enough to allow them to get banking facilities to cover their businesses. This has been brought about by the soaring levels of unemployment in the country resulting in many setting up small enterprises. Following the recent report from CrystalPerk Mombasa Magazine, most graduates in Kenya will likely be unemployed, jobless or unemployable as soon as they graduate.
Starting a successful SME in Kenya is largely dependent on the political environment. The Kenyan political environment over the years can be considered fragile and troubling but the pandemic has complicated the situation further for young traders. To the lucky ones who have managed to even set up shop, the dwindling and reduced sales by most establishments since March 2020 by most businesses is attributed to the low purchasing power by most Kenyans who have to battle with being retrenched or closing shop on most of their businesses.
Working hours being reduced to conform to curfew hours is a problem that cannot be taken for granted given the nation had started operating most activities as a 24-hour economy.
High levels of taxation by both national and county governments with a view to break even is also putting SMEs through the guillotine as most are forced to part with a lot in meeting their tax regulations leading to failure by enterprises to take off. About 55% of the SMEs were facing dissolution by their owners should the situation within the country persist.
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The absence of laborers, slowdown of productions, shortage of raw materials, and transportation restrictions is also having major ramifications on these businesses. This is having a significant impact on the national economy as a whole.
This is laying bare foundations for increased levels of poverty across the country and watering down the gains made over the years in eradicating social evils such as crime and violence that are connected with it.In response, a robust policy response that includes SME owners in formulation given their stake on the national economy is also essential to offset the negative effects of the current outbreak.
The impacts and further potential threats from COVID-19 are still undefined, it is therefore principal for small businesses to reinvent themselves by adopting strategies that will enable them to still conduct their businesses with their customers contactless during this period of COVID-19.
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