A busy section of the Nairobi central business district. The impact of social distancing, dusk-to-dawn curfew and closure of businesses has impacted on consumer spending, leading to job cuts and unpaid leave for workers as firms race to cut costs. FILE PHOTO | NATION MEDIA GROUP • To limit its spread, Kenya has suspended commercial flights in and out of the country, imposed a dusk-to-dawn curfew and banned public gatherings.
• It has also halted movement in and out of counties hit hard by Covid-19, including Mombasa and Nairobi—regions that form key pillars of Kenya’s economy.
• Small traders like barbershops, hotels and pubs, which have had to close under coronavirus lockdown measures, have been hit hard by effects of the virus.
About 75 percent of Kenya’s small and medium-sized businesses face collapse if they fail to get fresh funds from banks or equity partners by end of next month, a Central Bank of Kenya (CBK) survey reveals.
Citing a study conducted in April, CBK Governor Patrick Njoroge on Thursday said the small businesses surveyed had said that without help they would close by the end of June because they lacked credit buffers and other resources to survive the slowdown caused by the Coronavirus.
The impact of social distancing, dusk-to-dawn curfew and closure of businesses like bars and restaurants has impacted on consumer spending, leading to job cuts and unpaid leave for workers as firms race to cut costs.
Should small firms be financially distressed, this will deepen job losses given that they account for the bulk of jobs in the country and have in recent years emerged as the biggest drivers of new hiring.
“There was a survey that was done at end of April and that survey indicated that three quarters do not have cash beyond two months. That means by end of June three quarters of the SMEs are already on the ropes and will be gone because they do not have any cash to keep the lights on,” Dr Njoroge told a virtual news conference.
“I wanted to underscore the urgency of… putting in place the credit guarantee scheme. This is extremely urgent. We cannot do this as business as usual.”
The government will provide guarantees for loans given to Kenya-based small and medium-sized businesses, meaning the government commits to repay banks a share of the loans should the small traders default.
The Treasury has sought MPs’ approval for Ksh3 billion ($30 million) as seed […]
