Coronavirus jolts Kenyans into new start-ups wave

The Covid-19 pandemic has plunged the world into a crisis, affecting every sector of the society. Life as we know it has changed. People are losing their basic freedoms, income sources, and even lives to this ravaging disease. To paint the picture of the economic ruin, the World Bank, in its latest Kenya Economic Update has predicted a 1.5 percent expansion in the economy this year. That’s a sharp fall from 5.4 percent last year.

Presently, distress indicators point to a country that is quickly hurtling towards the World Bank projection. Just last week, the Kenya Association of Manufacturers together with audit firm KPMG released a report showing that over 30,000 formal employees have lost their jobs, many others are forced to take deep pay cuts, which still does not guarantee them jobs as the virus continues to wreak havoc on the economy.

But all is not hopeless. In light of this conundrum, many workers have found ingenious ways to ride the crisis, supplementing their dwindling incomes or altogether finding more lucrative sources. As a result, the start-up economy has recorded increased activity.

One such man jolted by the pandemic is Michael Libamira, an entrepreneur at Golden Memories Adventures and Events, an events and tours and travel business outfit. “Prior to Covid-19, business was good,” he shares with the Business Daily.

Michael says Golden Memories was bringing in at least Sh2.5 million per month, enough to employ at least 100 people per month. Business was so good he was planning to expand. Unfortunately, he had to shelve the plans and now runs Hometown Carwash, a car washing business as the name implies.

Michael admits that when he heard about the Covid-19 in China, it wasn’t a cause for worry. But as the disease progressed, affecting the travel and events sector, the 30-year old who has a wife and child, started thinking of how he would provide for them. It was then that he and his wife, Lucy, decided to venture into the car wash business in March.

“On the Friday the first Covid-19 case was announced, I cancelled the event that was happening the following day,” he says. It was a cake-tasting event for 50 brides. That cost him potential revenue as through the event, he had hoped to market his event management service to the brides attending. Days later, he had to cancel all his April to June events - six weddings, two tours and conferences. Besides the cancellations, he had to return all down payments made.

Hometown Carwash now supports them. He let go of all his employees save for 12 whose roles he had to restructure.

“The two chefs I have, wash cars. We’re also all on half salaries.” With their income reducing by 80 percent, they have resorted to reducing their expenses because when Kenya will be declared Covid-19 free is anyone’s guess. "We’re grateful that we prepared early. I don’t know where our employees and I would be.”

A recent study done by BFA global, Covid-19 and Your Finances, found that amid the pandemic, incomes in Kenya have decreased significantly while expenses have increased significantly.

Peter Kyobe can attest to this.

In 2014, Peter, bought a motorbike. He used it daily to go to work at a high-end hotel in Nairobi, where he worked in the Housekeeping Department. Today, the motorbike is his source of income after he and his fellow colleagues were asked to take a pay cut.

“Our industry took a major hit and the effect has trickled down to employees like me,” the 36- year -old says. They were first told to take a 50 percent pay cut, but at the start of this month, they were sent on unpaid leave until December. This has made him vulnerable to income shocks. As a result of staying at home, his expenses on electricity, water and food have increased and his landlord still expects him to pay rent at the end of the month. To make ends meet and reduce reliance on his savings, he has started a micro-business in the service sector as a courier service provider.

“I deliver cakes and pizza. Basically, anything that can be delivered, I deliver,” he says explaining the idea for the service started when his friend asked him to deliver a cake.

Delivering goods was easy for him to consider as he already had a motorbike. Before the pandemic, he would earn between Sh43,000 to Sh68,000 per month, which could afford him a bit more than the basic necessities. This is not the case anymore.

“The delivery business doesn’t earn me much, but the little I earn can cater for the daily necessities.” He averages between Sh3,000 to Sh5,000 a day. To stretch the money across the month, he has had to reduce his meals from three to two a day. However, he has to tread carefully because there’s an added expense. Fuel for his bike. Kyobe has to ensure that he doesn’t earn wages only to put them in a bag with holes.

And while the beauty industry globally has been counting its losses, Brenda Wangeci, founder of Untamed Beauty, has been counting her blessings. Wangeci, who’s passionate about redefining beauty for the African woman, was selling luxurious lip stains and eye pallets before the pandemic. She had just left her career as a lawyer and her fairly new business was taking off, when her Asian suppliers informed her about the “flu” that was going round.

“This was in December, and the conversation we were having was how I should increase the size of my shipment since flight bans would be effected,” she recounts. Wangeci’s entrepreneurial gut kicked in and three weeks after the disease landed in Kenya, she switched from selling lip stains to organic, hand-made Grade ‘A’ Nilotica Shea butter . She chose Nilotica because it’s sourced within East Africa, thus easier to access. It was a calculated risk that paid off because five days after launching the product, she made Sh1.6 million in sales. She sells the smallest jar (28g) at Sh300.

“At the moment, people have time to slow down and are looking for products to soothe, heal and restore their skin and hair,” she explains, adding that she’ll be launching three organic face masks and two facial soaps in a weeks’ time. “To be honest, I wouldn’t have considered selling East African sourced, organic cosmetic products before this happened,” the 36-year old admits. “There’s actually value within African boundaries.”

Another individual who’s adapting herself to the new normal is Linda Odilo, who works for a local airline. Instead of waking up early to report to the Customer Service Department desk, she reports to Linda’s Fruits and Veges, a small business that she started to supplement her income. Dressed to keep her body warm and protected from the virus, she makes trips to the market, buys what her customers need and packs the orders neatly for a pick-up or delivery. She does all this from home.

“Linda’s Fruits and Veges had perhaps been a business in the making,” she says. “But Covid-19 has pushed me to actualise it.” Linda has always been big on eating healthy. Every time she went to the market, her neighbours would peek into her basket, see what she’d bought and then buy it off her. This became more frequent as movement was restricted and as people started eating healthy to boost their immunity. She saw a gap, and decided to fill it. People were willing to pay for this, making the venture more attractive.

Where did she get the start-up money? “I used my savings plus the money I had set aside as my school fees, “she explains. “I know it’s risky, but I talked it over with my husband and we agreed to do this.”

Her husband still works and therefore, Linda doesn’t have to worry about providing for their four-year old daughter.

Because the business is new, she’s yet to get a return on her investment but she’s hopeful.

Even after Covid-19 is gone, and we have all gone back to work, people are still going to need healthy, affordable food to eat,” she remarks, adding that it’s important for people to start thinking about having multiple sources of income to shield themselves from unexpected income disruptions.