SMEs brace for tougher times ahead as Covid-19 pandemic bites

Friday, April 24th, 2020 12:00 |
Jua Kali artisans. Photo/File

Lewis Njoka @LewisNjoka

Workers in the informal sector are staring at tough times ahead, having lost over half of their weekly income due to the ongoing Covid-19 pandemic. 

This revelation comes at a time when studies show that micro, small and medium enterprises (MSMEs), the main source of income for people working in the informal sector, will be the hardest hit by the pandemic.

A report by United States International University-Africa (USIU-Africa) and Network of Impact Evaluation (Niera) shows that incomes of informal sector workers reduced by 51.2 per cent in the first 30 days since the first Covid-19 case was announced in the country. 

Weekly income

Overall average weekly income has decreased from Sh2,380 before the crisis to Sh1,220 during the crisis, according to the report. 

The report also shows that a majority of the people working in the informal sector (92 per cent) did not take any measures to cushion themselves against the effects of the pandemic on their sources of income.

“Thirty days after the occurrence of the crisis, incomes of the workers reduced by 51.2 per cent greatly affecting those in peri-urban counties and those aged more than 53 years.

Over the same period, 22 per cent of the respondents have already borrowed money, 13 per cent have lost jobs, and 18 per cent are spending the money meant for other priorities including business for domestic consumption.

Others have already moved from urban to rural areas in the hope that life is bearable in the rural areas,” reads the report in part.

Despite the significant reduction in income, most of the people working in the informal sector (83 per cent) are yet to receive any help.

Thus, most of the workers are finding themselves having to choose between buying food and paying for healthcare. 

“To the workers, the main worry if the crisis persists is food (36 per cent), health (19 per cent) and inability to pay bills (15 per cent),” says the report.

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