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Enterprise

Silver lining for businesses in dark cloud of pandemic

Muthurwa Market
Sellers and buyers at Nairobi’s Muthurwa Market in downtown Nairobi on April 22. Below; Risk management expert James Kariuki. FILE PHOTO | NMG 

It is not in doubt that the coronavirus outbreak has impacted the way business operate across the country.

The pandemic has also disrupted the country's economy that was showing growth signs a few months ago.

From supply chain disruptions to decline in revenues as well as sales, many businesses are now finding it hard to stay afloat. And as economic lockdown persists, experts are warning more businesses could be wiped out, with millions of more jobs at risk.

Despite this gloomy outlook there is a silver lining in form of the lessons that businesses are learning, helping to in-build resilience and be well prepared of such challenges in the future.

John Gitonga, a second-hand clothes retailer at Nairobi’s Gikomba open-air market, says the virus has bitten off a chunk of his business. He says the stock that he currently has can only last for less than a week even as supplies runs.

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"Nowadays, getting second-hand clothes supplies has become a herculean task as suppliers report shipment delays over border restrictions imposed by governments around the world," Mr Gitonga says.

The stock shortfall, he says, has created a demand for the products leading to increase in prices.

The government's stringent measures such as dusk-to-dawn curfew as well as movement restrictions have only conspired to worsen the situation as the number of customers has greatly declined.

Moreover, Mr Gitonga says customers’ purchasing power has been hit hard as majority of them have either lost their jobs or fallen in hard financial times.

“Previously, I would see more than a hundred customers per day in my stall, but nowadays I only get below 50,” says Mr Gitonga.

When business was good, Mr Gitonga would sell merchandise worth Sh20,000 daily. This has drastically reduced to less than Sh5,000 this days.

Pushed into a tight corner, he has been forced to devise new ways to keep his business afloat.

“I have been forced to trim my expenses. For example, I now spend only Sh500 per day unlike Sh1,000 before for my family and personal needs” he says.

Moreover, he says he has learnt the importance of having enough stock as supplies are not immune to disruptions.

Even with new methods he has adopted to keep his business kicking, Mr Gitonga is a worried businessman.

“If the lockdown persists, I will be forced to close down my business due to supply shortages,” he adds.

Stephen Oduor who is in transport business says his business has really been affected as his matatu is no longer in business after the government banned in and out movement into Nairobi Metroplitan Area (NMA).

He says his vehicle used to ply the Kitengela-Namanga road. Every day, he would make three trips that would fetch him Sh12,000.

“I have now resorted to transporting essential goods which are not as lucrative as passenger services,” he adds.

The biggest lesson that he has learnt in business is the importance of diversification as well cultivating a savings culture.

"I have a Sh500,000 bank loan that I was servicing monthly through the matatu business income. However, with no source of money, I fear the bank may repossess my Matatu," Mr Oduor states. Meshack Ngure, a money transfer agent at the Namanga border point, is also undergoing similar fate as transaction at his shop has taken a hit.

“Pre-Covid-19 period I would conduct more than 20 transactions worth Sh2 million daily, but they are now less than ten deals worth Sh500,000,” he says.

He attributes the decline to the closure of the Kenyan-Tanzanian border point. Predominantly, his clients are truck drivers as well as traders who reside in both Kenya and Tanzania sides.

He has been forced to cut costs to keep going.

Risk management expert James Kariuki says the pandemic has forced many companies to rethink their operations and strategies.

“In-building the element of risk preparedness into businesses strategies will be a must going forward for companies,” Mr Kariuki says, noting most businesses have never before experienced the magnitude of the disruption they are currently going through thanks to the pandemic.

Risk managers and experts, he notes, will have their work cut out for them as firms look for measures to cushion themselves in the event such a catastrophe as Coronavirus hits again.

Mr Kariuki says companies will also look to diversify their business as a way of spreading their risks wide.

Ken Gichinga, chief economist at Mentoria Economics, a business consulting firm, says one key lesson for firms is to rely on local supply chains as they are more sustainable and agile in adapting new situations in the long run.

“Global supply chains are more sophisticated and are prone to numerous disruptions which can impact on the ability of a business to deliver,” Mr Gichinga says.

However, he notes that many businesses will shift to sustainable models as they tend to be safer in the event of economic disturbances.

Retail Association of Kenya (RAK) chief executive Officer Wambui Mbarire says retailers are now seeing benefits of e-commerce.

“Retailers are now seeing e-commerce as important as physical sales. So moving forward, we expect more businesses to go this route,” Mrs Mbarire says. Retailers, she adds, have learnt the importance of keeping stock as global's supply chain is not immune to such disruptions.

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