Give lockdown reliefs to small businesses, SMEs

If last year’s lockdown of the country was bad enough for Small and Medium Enterprises (SMEs) and micro-enterprises, the current one on five counties is likely to be the straw that will break the camel’s back.

That is, unless Treasury honchos, working with county governments, step in to cushion the latter from the loss of revenue that they are enduring.

Law enforcers, who have shown uncommon zeal in enforcing lockdowns, should be reminded that micro-enterprises and SMEs are Kenya’s biggest employers. They include hotels, restaurants and bars, which have been a critical cog in the economic wheel.

As such, closing them down, especially on the eve of an Easter weekend, can only mean their workers will be home worrying about where their next meal will come from when in fact they should be cherry-picking customers.

True, current containment measures could, and ought to, lead to a reduction in new Covid-19 infections.

However, there is no data, at least not in public domain, to show where the highest numbers of new infections are coming from.

All that we have is conjecture with some blaming political rallies and others pointing an accusing finger at Kenya’s open skies and borders.

All too often, policymakers are wont to forget that small businesses have tentacles in practically every sector of the economy.

As such, strangling them will have far-reaching ramifications for economic activities, government’s effort to raise more taxes and, ultimately, on public health and safety.

If not checked, for instance, they could lead to more cases of depression and domestic violence, not to mention altercations with law enforcers.

Already, we have witnessed two instances in which police had to use force to disperse protesting crowds unhappy with the new measures; when entertainment and hospitality industry workers picketed outside Harambee House and when a group of travellers tried to force their way past a lockdown barrier in Thika. 

Unless there is a more deliberate effort to protect livelihoods and to ensure people who really need to get in or out of the quarantine zone are given a mechanism through which they can be vetted for access, we are likely to witness more scenes involving unhappy citizens and the police.

Of course, when people have no legitimate avenues for earning a living, they resort to underhand means, be it criminal or immoral activities.

We must not turn a blind eye to the possible consequences that these routes pose for public health and safety.

It is, therefore, important, first, for government to consider tax waivers for all businesses.

Already, some of them had paid their licence fees for 2020 and 2021 although they have not been operating optimally over the past 13 months.

Many have announced intentions of laying off staff since the second lockdown.

Again, practically, every business owes lenders as has been witnessed in the number of non-performing loans that banks are declaring. That means all businesses are hurting. 

To add insult to the injury, the Energy ministry has warned Kenyans to brace for higher fuel prices, yet logistics is a critical enabler of micro-enterprises and SMEs.

That can only translate to higher operation costs in an environment already made difficult by depressed revenues.

The upshot is likely to be that over the next year or so, individuals who had taken risks to invest in small businesses will no longer have any incentive to continue pumping their resources into an economy that can be closed at will, that is difficult to work in and that is basically unpredictable.

Yet these are the businesses that employ Kenyans, that source their raw materials from local farmers, that keep trucks on our roads and that pay taxes to both levels of government. 

Despite this, in their hour of need, government officials appear to be playing by a different set of rules that neither pay heed to the challenges the businesses are facing nor offer reliefs that will keep them from sliding deeper into the red.

For months, both Treasury and private lenders have been making promises about securing funds to cushion small businesses although there is hardly much to show for the promises on the ground.

It is time they walked their talk and actually put in place a mechanism to keep small businesses afloat. Indeed, it is in their short and medium-term interest to do so. — The writer is a partner and head of content at House of Romford — Mbugua@houseofromford.com