Micro and small businesses are now re-jigging their strategies as they seek to change their fortunes following the adverse effects of the Covid-19 pandemic.
While many businesses have direly needed financial bailout to stay afloat, a new report says a number of enterprises now say while money is crucial for their revival, business strategy and adoption of new innovative models are more important.
Micro and small businesses are now re-jigging their strategies as they seek to change their fortunes following the adverse effects of the Covid-19 pandemic.
While many businesses have direly needed financial bailout to stay afloat, a new report says a number of enterprises now say while money is crucial for their revival, business strategy and adoption of new innovative models, such as going online, are more important.
The Kenyan SME Sector Performance Report by WYLDE International, a professional service firm that specialises in entrepreneurship survey, reveals that nearly a half of small and medium sizes (SMEs) recorded a decline in performance between September and October last year, mainly due to economic setbacks caused by measures taken to contain the spread of Covid-19 pandemic.
The adverse effects of the pandemic have compelled may businesses to change tack, upon realising that finances are just one of the many aspects that make a business healthy and thriving.
While funding for SMEs remained critical after the coronavirus restrictions were eased, the report says their significance has now lessened as businesses seek other ways to infuse resilience in their operations.
Only 60 percent of SMEs believe that funding or grants are important, which is lower than 80 percent between March-April, the report states.
Non-funding needs such as review of business strategy went up from 23 percent to 65 percent in the period, business development and management skills training (46 percent) and tax reliefs/waivers/discounts (45 percent).
“The WYLDE Report discovered that SMEs require strategy development for their business more than they need financing,” WYLDE Managing Director Christopher Odongo said.
Some of SMEs biggest challenges cited in the report are capital (58 percent), operational expenses (20 percent) and impact of the lockdown (11 percent).
The government, last year, imposed strict lockdown measures that included a ban on local and international flights, in-and-out movement restrictions in five counties of Mombasa, Kilifi, Kwale, Nairobi and Wajir as well as dusk-to-dawn curfews (7pm to 5am) to contain the spread of the virus.
These saw hundreds of thousands of firms close down, leading to loss of thousands of jobs.
Some of these restrictions have, however, been entirely, lifted while others have been eased.
The turmoil caused by the pandemic did not just hit the SME’s hard. Big firms were also affected, with the Kenya National Bureau of Statistics (KNBS) data showing that the number of people in employment fell to 15.87 million between April and end of June compared to 17.59 million the previous quarter.
The report, which was conducted between September and October, involved 132 SMEs in Nairobi.
The findings revealed that businesses that had the smallest number of staff at less than five employees, both part-time and full-time workers, increased during the survey period as more SMEs began to resume offering their services.
“Businesses had also adapted their workforce to meet the growing market demand brought on in the slowly recovering economy,” Amethyst Consulting (survey conductor) Director Sharon Mbugua added.
“ For employers however, employee health and safety remained a huge concern (69 percent) followed by the need for employee retention at 40 percent importance.”
To help the sector recover, traders are recommending removal of curfew to allow more operation hours. They also want the government to educate them on the implication of new taxes and their impact on businesses.
Traders interviewed also called for business support by organisations and financiers to create stimulus funds for hard hit sectors such as tourism and hospitality industries, help businesses to develop digital business models and putting in place capacity building programmes that focus on helping SMEs create new business strategies.
Similarly, entrepreneurs recommend leveraging on digital tools to stay visible, take advantage of stimulus packages and develop and adopt intentional growth strategies.
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