This archive report was first published on 8 May 2020.
Kenya's Economy in Crisis: Small Businesses Struggle to Survive ¶
As the COVID-19 pandemic continues to ravage the world, Kenya's economy is facing its toughest test in over 40 years. The International Monetary Fund (IMF) has officially declared that the global economy is in recession, and Kenya is no exception.
Millions of jobs have been lost in the travel, real estate, and hotel industries, with businesses forced to close their doors due to stringent containment measures. The export of horticulture, tea, and coffee - main sources of foreign exchange reserves - has plummeted, and inflows from tourists have fizzled out.
The Central Bank of Kenya warns that it is only a matter of time before Diaspora earnings are also curtailed. As a result, reputable institutions have been forced to revise downwards their growth projections for this year, painting a grim picture of an economy that might plunge into recession for the first time in over 40 years.
Even the informal sector, which has long been immune to financial upheavals, will be hit hard. With over 80% of Kenyans eking out a living from the informal sector, it is imperative that urgent measures are taken to cushion small businesses from the pandemic's ravages.
At the Kenya National Chamber of Commerce and Industry, we are working to help businesses navigate these challenging times. We urge authorities to hasten the process of rolling out a viable guarantee scheme that will have the Government underwrite loans that banks extend to riskier SMEs.
With forbearance of blacklisting of loan defaulters at Credit Reference Bureaus (CRBs), we can help SMEs weather the COVID-19 storm. It is time for us to come together and support our small businesses, which are the backbone of our economy.
