SMEs worst hit by pandemic – Survey
Small and medium-sized firms have been the worst hit by COVID-19, according to a survey undertaken by the Kenya Private Sector Alliance (KEPSA), which represents 264 businesses in the informal and formal sectors.
Majority of medium-sized firms (55%) have retained their employees and are keen to ride out the rough tide. KEPSA, carried out this survey to determine the needs and concerns of business to ensure a more targeted engagement with Government as Kenya works to deal with the impact of coronavirus.
This is the second time KEPSA is undertaking a survey to determine how business has been impacted by COVID-19 gauge various interventions made so far to safeguard jobs and protect key sectors from the pandemic.
A total of 2,466 firms participated in this latest survey with 81% reporting being affected by the pandemic. Tourism and the Education sector are listed as the most affected by COVID-19 related disruptions including lockdowns and stoppage of international flights.
The survey showed that 85% of small and 78 per cent of medium-sized business reported the highest impact. This is compared to 78% of micro-enterprises and 70% of large companies.
Agriculture, Transport, Manufacturing and Tourism, listed as the largest contributors to Kenya’s GDP, have also recorded the highest financial losses in real terms, says the report.
With Europe and other overseas markets opening up, the horticulture sector is expected to recover quickly as it seeks to meet demand overseas. However, KEPSA notes that cost of freight still remains a major concern.
The least affected sectors are finance, health and social work with the environment, water and waste firms reporting impacts of 47%,50% and 56% respectively.
The survey shows that less than 45% of firms interviewed have had to close part of their measures to migitate the impact of the pandemic, with small business the most affected. Businesses in the tourism and education sector have had the most closures while 58% of large companies in the finance and insurance sectors have not laid-off workers.
This is compared to 52% of small business and 58% of micro-enterprises respectively reported laying off workers.
Overall, businesses are expected to cushion themselves following measures such as reduced VAT, PAYE, Turnover and Corporate tax levels.
Pending Bills and unsettled VAT refunds continues to hurt big companies, affecting their liquidity. The survey shows that most businesses would like financial support from the Government, including grants or affordable credit, to help them pay salaries.
Across sector, the KEPSA survey gathered that business have seeking for support to pay salaries until the pandemic ends. Firms have also appealed for speedy processing of VAT refunds, tax waivers, loan repayment holidays, subsidy or relief for rental payments and utility bills as well as clearance of pending bills.