In Kenya the informal business sector is on the brink of collapse

Maasai market is one of the busiest markets in Nairobi city during weekends being an African merchandise market. It attracts tourists from different countries who come to experience the Maasai culture and art, but due to the pandemic, traders have experienced slow growth of business due to the banning of International and local passenger flights.

The market is deserted and the traders are in survival mode. Most of the traders live outside the capital city of Nairobi, that means they have to commute from different nearby towns to Nairobi to sell their merchandise. Due to distance, they incur huge transport costs and they have also had to pay for the business space. With the current situation they have been really affected negatively.

Since the first report of Covid-19 cases on 13th March 2020, the number of confirmed cases has risen to 20,000 persons as at 31st July 2020, according to the Kenyan Ministry of Health and the numbers are rising exponentially. The Government had to put in place precautionary measures that have led to banning of all passenger flights and cessation of movements in and out of high- risk areas like Nairobi, the capital city of Kenya, and Mombas which are the worst hit by the pandemic due to high population and congestion in slum areas making it difficult to for social distancing. These precautionary measures continue to have a negative economic impact in the country. Businesses have witnessed slow growth as the demand of goods and services have declined drastically. The spread of the virus has caused havoc in the informal sector that comprises small and medium size (SMEs) businesses.

In the capital city of Nairobi on a chilled afternoon the usual busy streets of the city are not busy any more due to economic constraints, the city is always noisy with music from clubs over the weekends but it's all quiet and looks like a ghost city and deserted. Most people are operating from the estates to avoid the cost of transport. We paid a visit to a young entrepreneur who runs a cyber cafe business in the city center.

Joseph ,popularly known as Josee, has been operating his cyber cafe for the last 4 years. The 26 year old entrepreneur said “since the government put in place precautionary measures it has been very difficult for me because business has really gone down to appoint that I cannot afford to pay the rent anymore. It is now 4 months since I paid the rent and my landlord wants me out of his premises. At my home I am in arrears too. I don't know what to do, I have a six month old baby and I feel like it's the end of my life. Customers are not coming like before; sometimes I end up spending money on transport and going back home with nothing, while I need to provide food for my family.
Josee at his Cyber Cafe serving client photo credit by: Ronald Mukanga
Josee at his Cyber Cafe serving client photo credit by: Ronald Mukanga

The lockdown has caused a lot of anxiety, he narrates. Before the lockdown, he used to make at least 1,500 Kenya to 2, 000 Kenya shillings per day equivalent to 20 dollars on a good day. But now that amount has reduced to 700 to 300 Kenya shillings per day equivalent to 7 to 3 dollars per day. With this amount, half of it goes to cater for transport and food expenses, living him with very little to save and pay rent.

Most small and medium sized enterprises are experiencing the same challenges in almost every sector. Most corporate companies have laid off many employees to stay afloat. This has reduced the purchasing power of many people who are now living on basic needs.

Impact on Maasai market, an african merchandize market in Nairobi, Kenya

Strolling through the Maasai market you can see not too many activities. The market that was always full during weekends has few customers due to lack of tourists who used to boost the market economy. Most of the tourists used to buy merchandise for business or as souvenirs but now there are only few people visiting the market.

“Franklin Akolo, a trader at the Market says business has been very slow” he lives very far from the city. The cost of doing business has gone up more than what he makes per day. He is very frustrated and desperate. “He says before the pandemic he could make 5000 to 8000 Kenya shillings per day equivalent to 50 to 80 dollars but now even raising 1000 Kenya shilling is a challenge. “I am making losses,'' he says, the transport cost to come to the market and to go back home takes almost half of the money, leaving me with money to provide basic needs for my family”.

Franklin is 30 years old and married with two kids who are now at home with him. “He says the kids at home need to eat. He has not paid his rent for the last 3 months. He is in fear of being auctioned by his Landlord during really tough times”but he is trying his best to make sure that his family is taken care of basic needs. A huge number of taxi drivers are experiencing the same challenges and most of them have closed the business to venture into other ways of survival. Taxi drivers make good business over the weekends due to the night events in clubs and active nightlife. Since the government put in place the precaution measures of night curfew this has affected the taxi business in a big way.

Franklin Akolo at his place of work at the Maasai market in the capital city of Nairobi photo credit: Ronald Mukanga
Franklin Akolo at his place of work at the Maasai market in the capital city of Nairobi photo credit: Ronald Mukanga

Impact on transport sector (taxis)

Due to the lockdown the transport industry has been affected immensely.

Marvin Kithusi an Uber driver says “ Things are really bad the car I am using is not mine I work for my boss whom we had an agreement to pay him 2500 ksh equivalent to 25 dollars everyday because he had taken a loan to purchase the car, before the pandemic I could meet my target and pay him but now I have defaulted to pay him due to lack of business. The bank is on my boss's neck because he has also defaulted in paying the loan we are both affected. The bank has issued him with auction letter I am afraid that I am going to lose my job what happens next I don't have any source of income I have 3 kids and my wife is jobless I am the breadwinner of my family, losing my job means losing my life it not easy” He says. Most taxi drivers are in the same situation; business has declined drastically because there is no night life and people are not going out for parties or events like before. Most of the taxi drivers decided to close their jobs, others banks have auctioned their cars.
Marvin standing next to his uber car that he drives in the city of Nairobi photo credit: Ronald Mukanga.
Marvin standing next to his uber car that he drives in the city of Nairobi photo credit: Ronald Mukanga.

Socio-economic impact

The economic consequences of the pandemic are likely to have a far greater impact on the long-term health, wellbeing and poverty levels of the population as a whole than the predicted fatalities caused directly by the disease. The sectors that have been affected most by the pandemic include transport, health, labour force, housing, trade and tourism. The capital city of Kenya Nairobi is the most affected with the pandemic due to various slums located in different parts of the city that are vulnerable to the virus due to the living conditions in those slum areas. Most of the population cannot afford things like masks and the hygiene level is in bad condition no sewage systems, no clean or running water people can't afford to wash hands regularly.

Now that the lockdown is easened a bit the majority population of people in the city are going through difficult times economically and mentally. The depression levels have gone high due to lack of employment for those in business and are experiencing low demand for products and services as the purchasing power has dropped drastically due to the economic impact.


 

Story written by Ronald Mukanga, a social entrepreneur that supports and develops startups and social enterprises that change community lives in Kenya.


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