Ideas & Debate

Grocery shops need help to weather Covid storm

shops

A busy street in Eastleigh, Nairobi. FILE PHOTO | NMG

Summary

  • A recent survey of hundreds of shopkeepers across Kenya, Côte d’Ivoire, Nigeria, and Tanzania showed that these entrepreneurs face a wide array of challenges.
  • The survey was carried out by the Pan-African Youth Entrepreneur Development (PAYED) programme, a partnership between Citi Foundation and the global non-profit TechnoServe that is supporting micro-entrepreneurs in these countries.
  • The most urgent problem cited was falling demand. Shop owners reported that their average number of daily customers fell from 39 before the crisis to just 24 in May.

In Nairobi, Candy Waithaka is fighting to feed her neighbourhood amid the Covid-19 pandemic. Last year, she opened a small grocery shop stocking items like rice, maize flour, and lentils.

She’d been searching for a way to earn a living, and looking around her neighbourhood, she recognised that there weren’t enough vendors to meet the demand for these essential elements of the local diet. Her shop did brisk business, and the 26-year-old was earning a steady income.

But all that changed when the Covid-19 pandemic struck in March. Customers shied away from the shop for fear of the virus; prices for some staples rose due to the added costs of transporting goods during a lockdown; and local residents cut back on purchases as their own livelihoods were put in jeopardy. By April, Candy was selling just $7 (Sh760) of groceries per week, and her store was at risk of closing.

For people around the developing world, micro-retailers like Candy are an essential source of food. In Nairobi, for example, they provide 80 percent of all basic consumer goods and are often the sole source of many items in vulnerable communities. The shops also provide job opportunities, especially for youth and women.

As these shops are threatened by the effects of Covid-19, people around the world could be left without a place to purchase affordable food. In a GeoPoll survey conducted during May in 11 African countries, 80 percent of respondents said that they felt unsure about being able to access sufficient food for their families. According to that same poll, just 40 percent of respondents said that most of the places where they typically buy food were open.

To protect food security against this threat, it is essential that we provide effective support to micro-retailers, helping them to stay in business and continue serving their communities throughout the crisis.

A recent survey of hundreds of shopkeepers across Kenya, Côte d’Ivoire, Nigeria, and Tanzania showed that these entrepreneurs face a wide array of challenges. The survey was carried out by the Pan-African Youth Entrepreneur Development (PAYED) programme, a partnership between Citi Foundation and the global nonprofit TechnoServe that is supporting micro-entrepreneurs in these countries.

The most urgent problem cited was falling demand. Shop owners reported that their average number of daily customers fell from 39 before the crisis to just 24 in May. This contributed to a drop in average daily revenue from $78 to $46. In total, 57 percent of the entrepreneurs cited low sales as their primary challenge. Covid-19 is also disrupting the supply chain and micro-retailers’ ability to keep products in stock. As curfews and lockdowns make it hard for shop owners to purchase goods for sales, one-third of survey respondents reported supply as their primary concern if the crisis continues.

Women entrepreneurs, who comprise the majority of micro-retailers, often face added challenges as a result of the crisis. For example, increased childcare responsibilities resulting from school closures fall disproportionately on women, pulling their time and attention away from their businesses at a critical time. A global World Bank study found that women-owned businesses were significantly more likely to be closed as a result of the pandemic.

All of this combines to threaten the profitability and survival of micro-retail outlets. Twenty-nine of the businesses surveyed by PAYED either paused operations or had permanently shut down, and 23 percent had suspended or fired staff. The good news is that effective support can make a real difference in helping businesses survive the crisis and lead an economic recovery. The World Bank recently found that nearly 40 percent of small businesses in Kenya were temporarily or permanently closed due to the crisis, but only nine percent of small shops participating in the PAYED programme had shut their doors.

What accounts for this discrepancy? When the Covid-19 crisis hit, the PAYED programme shifted its approach, applying a variety of remote communications channels to provide entrepreneurs encouragement, emotional support, and tailored advice in areas such as:

Financial management during a crisis, leveraging a crisis toolkit that helps entrepreneurs adjust expenditures and adopt new measures in order to reach their financial break-even point; Effective stock management and launching complementary lines of business; Innovative sourcing strategies, such as creating micro-retail WhatsApp groups to identify new suppliers and using virtual platforms to compare prices between suppliers; The use of social media and SMS to communicate with customers and offer home delivery to those who are afraid to shop through home deliveries; Improved access to finance through rotating group savings; The promotion of cashless transactions and other practices designed to reduce health risks to customers and shopkeepers.

Candy is one of the shopkeepers who have been able to stay in business during the crisis. Working with her PAYED business adviser, she developed a survival strategy that includes marketing and selling food staples through Facebook and other social media platforms. “Online business has potential to grow beyond the four walls of a shop,” she said.

She also expanded her business to include other products and services that people need during the crisis, such as cooking gas and mobile money. As a result, her sales have rebounded to $50 (Sh5,400) per week, and her shop continues to serve as an important resource for the community. Her most important lesson from the experience is simple: “Don’t be afraid to try new things. Change can be good, too.”

To prevent a global food crisis, governments, the private sector, and civil society must change, too. It is urgently important that we help more of the entrepreneurs who keep our food systems working. There are millions of shopkeepers like Candy in the world, and through timely and targeted support, we can help them weather the current crisis and continue to serve their communities.

Mugambi is CEO and managing director for Citibank Kenya. Waweru is regional programme manager, TechnoServe