Kenya has always thrived on the wheels of small and medium enterprises (SMEs). The sector has been and is still key in empowering people economically, facilitating financial inclusion, and enhancing daily economic activities in the country.
In a country whose unemployment rate has been rising with each passing day, the sector employs at least 86 percent of the population and provides at least 45 percent of the gross domestic product (GDP).
Even with the massive importance of the SME sector to Kenya’s economy, the sector has often been faced with a myriad of challenges that have seen millions of them give up and close shop.
Some of the most common challenges that have often hit the SME sector hard include inadequate funding in terms of credit from most financial institutions, inaccessibility to ready markets, as well as inadequate knowledge on how to sustain their businesses in presence of a pandemic such as Covid-19.
Stats from the Kenya National Bureau of Statistics (KNBS) indicated that at least 450,000 SMEs were shut down operations annually. This translates to at least 30,000 SMEs shutting down monthly, and 1,000 daily. Given that these stats were given before the advent of Covid-19, the number of those SMEs shutting down might have doubled.
The coming of Covid-19 has dealt a heavy blow to the Kenyan SME sector. Thousands of businesses have shut down and millions of Kenyans have been rendered jobless. Truth is Covid-19 was something that was not anticipated. It is an event in history that no one was ready for. Institutions and businesses did not have strategies in place. Organizations had not figured out how they can enable employees to work remotely and still deliver the same required results. Many have ended up reacting towards Covid-19.
A survey carried out by Kenya Private Sector Alliance at the peak of Covid-19, indicated that Small and mid-sized companies were the hardest hit by the slowdown in the economy caused by the coronavirus pandemic. A total of 2,466 businesses participated in the survey, with 81 percent reporting they had been impacted by Covid-19.
“Small and mid-sized companies reported the largest impact (high to very high) at 85 percent and 83 percent respectively in comparison to 78 percent of micro-enterprises and 70 percent of large companies,” KEPSA said in the report.
On the other hand, the Kenya National Bureau of Statistics (KNBS) in September, released stats that showed that Kenya’s unemployment rate grew two times between the month of April and that of June as 1,716,604 Kenyans lost jobs in the face of the Covid-19 pandemic.
The number of employed in the country according to the data agency shrunk to 15.9 million Kenyans from 17.8 million Kenyans in March. This was a result of businesses shutting down en masse and people losing their jobs due to Covid-19.
Kenya’s unemployment rate stands at 10.4 percent from 5.2 percent in March with the employment to population ratio sliding to 57.7 percent from 64.4 percent. The numbers are set to increase with the persistence of the pandemic.
The number of unemployed grew by 58.6 percent to 1.8 million Kenyans from 961,666 in the first quarter of 2020. The unemployment picture is however further exacerbated by a rise in the number of the long-term unemployed and individuals outside the labor force which masks the unemployed statistics.
When people lose jobs en masse, the ripple effect cuts across sectors, especially the SME sector. Both the middle class and the lower class are the reason why small businesses thrive in Kenya. Even though they are consumers of the products and services, the majority of them also survive by running the businesses. When they lose jobs, SMEs are losing customers, and to some extent, potential investors.
Even though the government, through President Uhuru Kenyatta announced the setting aside of around 57 billion shillings, under the Covid-19 economic stimulus program to support small businesses, the program seems to have targeted few registered businesses. Millions of small businesses that are the real drivers of the economy have not benefitted.
It was, therefore, encouraging and reassuring when global giant Coca-Cola decided to tailor its operations towards supporting small businesses in Kenya both financially, training, and support on how to sail through the pandemic in these challenging economic times.
The “Open Like Never Before” initiative is like no other, and a great step towards helping small businesses across the country remain afloat even as the second wave of the pandemic hits hard.
Open like Never Before is an initiative by the Coca-Cola System in Kenya – Coca-Cola East and Central Africa Franchise and Coca-Cola Beverages Africa-Kenya in partnership with Absa Bank, Co-operative bank, Amref Health Africa in Kenya, and Women Enterprise Fund.
The initiative is set up to support micro, small, and medium enterprises to re-open safely and recover from the economic impact of the COVID-19 pandemic and the lockdown that saw most of them lose revenue and close.
This is a time for individuals and businesses to be open like never before. What this means is that these are strange times and one might not get different results by using the same trading methods they used before Covid-19 came knocking. It is time to think beyond the box and invent new ways of survival that include and not limited to changing business models.
The current SMEs need guidance. Needs someone to hold their hand, the way Coca-Cola has opted to do. For years, we have considered SMEs as personal initiatives and enterprises; which is true but we often overlooked their importance to the general economy of Kenya.