Covid-19 has not only been a threat to human existence but it has also claimed the lives of Small Medium Enterprises (SMEs), with some already in very critical conditions and are admitted in the ‘ICU’.
In Kenya, the projections are very high as the Central Bank of Kenya (CBK) predicts that most SMEs (estimated at 75 percent) would collapse by the end of June 2020 since their conditions are currently very critical.
While basing his reference on a survey conducted by McKinsey and Company, CBK Governor Patrick Njoroge called on the Government to act with urgency and save the SMEs that make up a third of the country’s GDP.
“Three-quarters of SMEs are on the ropes and would be gone as they do not have any cash to keep the lights on, pay for supplies, and compensate workers. The urgency to SMEs is clear to us and we understand it as we have a pulse on that part of the economy,” Dr. Njoroge said on Thursday, May 28, 2020.
SMEs play a crucial role in the economy of the country and have been key in creating employment opportunities for a good number of people especially the youth. But since COVID-19 stepped foot into the country, the lives of the SMEs have been on the line.
Some sources reveal including KEBS reveals that up to 1.2 million people have lost their jobs since Covid-19 visited the country while thousands were in the informal sector who were depending on SMEs.The formal sector has not been anywhere better in employing Kenyans.
According to Dr. Njoroge, saving the SMEs is not a matter of splashing money to them now and again but it entails providing long-term solutions for the businesses which will help them stay afloat during and after the crisis.
“The issue is not about throwing money at SMEs. It is finance plus. This is an issue of providing solutions to their problems, therefore, for instance, exists a need to drive demand for their products, “the CBK Governor argued
The CBK commended the efforts that the Government and Banks have done to rescue the SMEs during this time but urged that more should be done during this time.