Impact of Covid on businesses to linger for years, report says

Some Coronavirus pandemic effects on small businesses will take a long time to cure, the latest study by research firm GeoPoll reveals.

In its findings, the report drafters note that a substantial number of business owners in Kenya, particularly micro, small and medium enterprises (MSMEs), are still unsure of their business’s survival, two years since Covid-19 erupted in 2020.

The Africa MSME Pulse Survey covered 312 MSMEs across three different African markets including Kenya’s 102.

It further found that more businesses will continue to scale back operations, including laying off employees despite the pandemic appearing to be moving to endemicity in most parts of the world.

Negative impact

“In our study, three out of every four respondents say their business was negatively impacted by the pandemic. The percentage is highest in Kenya at 81 per cent,”  the report reads in part.

 This follows previous GeoPoll studies in which Kenyans were most likely to report losses in personal income and employment due to the pandemic. A majority of the MSMEs surveyed in the study – which is about 57 per cent, had to lay off, halt work, or reduce salaries for employees in the past two years. The trend remained consistent across the three countries including Nigeria and South Africa, with the construction industry, for instance, hit particularly hard, with 80 per cent saying they had to take adverse hiring measures. “With less income coming in, many construction clients likely halted long term projects over short-term uncertainties,” it noted.

More than 70 per cent of the MSMEs, the survey conducted last December shows, were forced to close their businesses at least temporarily due to the pandemic, of which only 17 per cent have fully resumed normal operations.

The largest percentage, 42 per cent, shut down temporarily and have opened at limited capacity. Despite many businesses resuming work to some extent, employment opportunities remain scarce as MSMEs try to recover lost time and revenue, it continued. Overall, GeoPoll found that 43 per cent of the MSMEs say they are not likely to hire or rehire staff in the next three months (between January 2022 and March 2022), with only a quarter saying they are very likely to fill positions.

Polls outcome

Those fears are now being compounded by the looming August 9 General Elections, a typical period employers tend to freeze hiring due to uncertainty of the outcome of the poll. Access to finance, an unfriendly taxation system and general economic conditions also heightened by the Russia-Ukraine war are also some of the factors choking the continuity of such businesses.

MSMEs are defined as enterprises that employ between one and 99 employees and in most cases, micro-enterprises have less than 10 employees; small enterprises have 10 to 49 employees while medium-sized enterprises have 50 to 99 employees.