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How local businesses can help most vulnerable in face of Covid-19

Since the Covid-19 pandemic landed in Kenya in March 2020, the most affected have been Kenya’s vulnerable people. These have ranged from people living below the poverty line to local businesses in the micro, small and medium enterprises category. Perhaps expectedly, this has not been far-fetched. According to Josphat Irungu, an economist and financial analyst, the populations living below the poverty line are not bound to give priority to coronavirus safeguarding measures that might affect their already depleted resources.

“These populations do not have health insurance. Health facilities are also not readily accessible. Access to water and basic sanitization products such as soap are a luxury that is not readily available or affordable. This means that the incentive for them not to adhere to the rules or go to a hospital even when they are symptomatic is high,” he says.

In addition, risk disparities in Kenya have also been the case of rich versus poor. Take Leah Mutua. The measures instituted to curb the spread of the virus have had a grave impact on her life. “I cook chapatis and githeri which I sell door to door in Mawanga, Nakuru County. I have been doing well but my business is almost crashing,” says the mother of three. Most of her customers now have time to cook their own meals and save on their budgets since they’re working or staying at home. “Almost everyone is saying ‘Ni kubaya’!” she says. “I live in a rented one bedroom house where I pay Sh. 3,000 rent. I have to risk and get rent. I don’t want my landlord to knock my door down or take away my roof.” Before the onset of coronavirus, Leah took home a profit of between Sh. 500 and Sh. 1,000. Today, she is lucky if she makes Sh. 200. Leah’s case plays out in many other small businesses whose owners have been risking the wrath of the virus to survive over the past 21 months.

In Kenya, banks have been at the forefront in assisting local people to manage their credit in the face of reduced economic wherewithal due to the pandemic. According to the Central Bank of Kenya (CBK), commercial banks restructured loans totaling Sh. 1.38 trillion amidst the pandemic. This also meant that banks as businesses returned losses or reduced profits.

“While liquidity of the banking sector remained resilient, credit risk was elevated with the ratio of non-performing loans rising to 13.6 per cent during the August-October 2020 period. Banks restructured their loans books due to liquidity pressures on the borrower. This affected lenders’ profitability which was something we had expected,” said CBK Governor Dr. Patrick Njoroge. The CBK said lenders reviewed Sh. 1.29 trillion of business loans in the period to December 2020, with firms in the trade, manufacturing, real estate and agriculture topping the list of applicants for reliefs. About 21.3 per cent of loans in the trade category were restructured followed by manufacturing sector (20.4 per cent), real estate (15.4 per cent) and agriculture (12.4 per cent).

Some businesses have also taken on corporate social responsibilities to support the vulnerable. This has included business capital support as well as social events. Take Certified Homes for example. In December 2020, Certified joined families in Korogocho slums to mark corona year’s Christmas. The organizing of the party by the management and staff of the real estate firm came as a relief for the vulnerable families at Korogocho slums in a year that was widely billed as economically depressed.

“This was not just a corporate outreach, but a reach out to our fellow Kenyans who may not have had as merry a Christmas as other Kenyans,” said Certified Homes managing director Peter Nyaga. “In addition, what we witnessed there is a need for corporates in the country to join hands and support our fellow less fortunate citizens through the pandemic.”

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Certified followed this up with a Sh. 100,000 capital boost for Sophia Nyatoti. Nyatoti had been stuck at the hospital with a huge bill after delivering triplets. In addition, she was already a single mother of five, living in a dilapidated mud house. “We decided to teach her how to fish instead of just giving her fish. This is because we believe that it is important to show people where to go and earn a living, instead of making them slaves of handouts,” said Nyaga.

According to Irungu, local corporates and leading businesses can do well to go beyond donations and focus more on capital boosts and financing of viable business ideas in the MSME sector. “The support is good, but nurturing of ventures that can turn into economic resources for the vulnerable is even better,” he says.

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