Kenyan Small and Medium sized Enterprises (SMEs) are the worst hit by the COVID-19 Pandemic in Sub-Saharan Africa, a report co-authored by Facebook and the World Bank shows.
According to the report dubbed Global State of Businesses Report: How Small Businesses in Kenya have been impacted, Kenya has been most affected by job losses due to COVID-19 pandemic with 65% of operational SMEs on Facebook in Kenya reporting that they have reduced their number of employees as a result of the pandemic.
This is higher compared to 45% of operational SMEs in South Africa, 45% in Nigeria and 47% in Ghana which reported via Facebook that they reduced their employees as a result of the pandemic.
Small businesses in Kenya have also seen a significant dip in revenue generation with 75% of Kenyan SMEs on Facebook reporting lower sales this year than last year while small businesses on Facebook in Ghana, Nigeria and South Africa reported, 56%, 59%, 67% lower sales respectively.
“The only way for SMBs in Kenya to survive the pandemic is to pivot to digital, for example in Ireland 65% of operational businesses on Facebook reported that 25% or more of their sales were made digitally in the past month this is considerably higher than Kenya where 46% of operational businesses on Facebook reporting the same,” reads the report.
According to the survey conducted between January and May 2020, more than a quarter of SMEs said they closed between January and May this year due to COVID-19 – but that figure rose to more than 50% in some countries.
A third of SMEs currently operating reported that they had reduced their workforces, a worrying sign of what could be a lengthy jobs crisis. Nearly two-thirds of small businesses in operation confirmed that sales are down in comparison to the same period last year.
Small businesses the tourism and hospitality sectors are some of the hardest hit. Globally, 54% of tourism agencies and 47% of hospitality and event SMEs reported that they were closed at the time of the survey. Micro businesses, which are SME owned and operated by one individual, have closed to a greater extent than those that have multiple employees.
Ghana reported 68% the highest number of small businesses on Facebook engaging in revenue operating activities while Kenya and Nigeria reported 62% and South Africa reported 57% of the same.
Taiwan and Czech Republic reported 96% and 94%(respectively) of their small businesses on Facebook engaging in revenue generating activities presenting an opportunity for more Kenyan SMEs on Facebook to consider engaging in revenue operating activities.
On a higher note, both male and female owned small businesses operational on Facebook in Kenya feel optimistic about the future of their business with 65% of female-owned and 66% of male owned businesses confirming their optimism about the future in comparison to overall 44% of small businesses operational on Facebook in South Africa feeling optimistic about their future.
At the time of the survey, almost a quarter (23%) of SMEs reported that they were receiving financial support in response to the pandemic, the majority of this in the form of government grants and loans-about 60% in total.
The report highlights, however, that this is far from universal across the sample with 27% of small businesses reporting that there was no assistance available at the time of the survey.The report confirms that businesses across the globe are spending time during the lockdown to prepare to re-open and are adapting their business models by developing an online presence.
The report also indicates that the path to recovery for small businesses is not certain and they need more support including salary subsidies, tax deferrals and access to loans and credit to offset ongoing cash flow and demand-side concerns.