Close to 1.7 million Kenyans were rendered jobless between April and July. The onset of the Covid-19 pandemic violently shook businesses the way a powerful storm buffets ships in the high seas.
Many of them – particularly small and medium-sized enterprises (SMEs) with very little working capital as well as big establishments in hospitality, aviation, education and entertainment – helplessly capsized.
Close to 1.7 million Kenyans were rendered jobless between April and July last year as the pandemic whipped businesses, according to official data.
However, large listed firms with fat balance sheets managed to brave the storm, with some recording super-normal profit growth in the first half of this year. READ MORE
But this was after they hastily carried out painful surgery in the middle of the Covid-19 onslaught in 2020.
Fearing that the ferocity of the pandemic would sink them, the firms sought to reduce the weight they carried on their balance sheet by offloading thousands of their employees.
Analysis of the annual reports for the 20 most valuable firms listed at the Nairobi Securities Exchange (NSE) by the Financial Standard shows that at least 14 of them laid-off workers.
Consequently, there was a net reduction of 1,905 employees even as companies such as British American Tobacco (BAT), Equity Bank, Co-operative Bank, Britam and NSE increased the number of their workers during this turbulent period.
While the austerity was aimed at helping the businesses to navigate the pandemic, it might also have touched off one of the largest labour crises since Kenya’s independence. SMEs with very little working capital helplessly capsized. Nonetheless, due to the restructuring, most of the companies managed to hang on until calm returned as people found ways of co-existing with the disease and economies began to recover.
Job-cutting eased the pressure on their bottom lines, with the benefits of reduced staff costs beginning to bear fruit in the financial results for the first half of this year.
Although the belt-tightening exercise cut across virtually every sector of the economy, it was more pronounced in the financial sector.This is due to the critical intermediation role banks play in the economy – savings for those with money to spare and lending to those who need cash.The year 2020 was a period of survival, not just for banks but for the entire economy.Kenya Bankers Association chief executive Habil Olaka noted that banks did not post any growth last year as they looked for ways to support […]