MSME RESILIENCE
We need a cohesive and coordinated approach to building MSME resilience
By Wangechi Muriuki
Kenya ’ s economy is largely driven by Micro Small and Medium Enterprises ( MSMEs ) and an informal sector that accounts for over 80 % per cent of the total workforce . SMEs employ about 85 % of Kenyan labor force which is close to 7.5 million aggregate employment ( Gure & Karugu , 2018 ).
MSMEs utilize locally accessible resources , foster innovation , employ technology , assemble smalldispersed private savings , and foster entrepreneurship development . They are key to not only driving industrialization as envisaged in Vision 2030 but are also crucial in achievement of the Sustainable Development Goals ( SDGs ) geared towards improved , equitable and sustained human development .
The impact of the Covid-19 pandemic on MSMEs has been immediately very detrimental and will continue to reverberate over a long recovery phase . Multiple factors ranging from direct and indirect human health outcomes , disruption on supply chains , massive layoffs , decreased air freight services and limited outbound air freights continue to be felt as the country braces for the impact of the Delta variant .
In the service industry , the drop in customers means no cash coming in to offset expenses and therefore a looming shut down and lay off of thousands of businesses and their employees will have ripple effects on clients , vendors , tertiary businesses , and the overall national economy . Service providers such as restaurants have been closed or switched to only take-away services , which has had direct and notable loss of income to the agricultural and transportation sector as well .
In some parts of the country , gyms , daycare centers , hair salons and spas , retailers etc . have also shut down or operate on quarantine sensitive timeframes and social distancing in compliance to Ministry of Health recommendations .
“ The approach to risk and disaster management has been reactive , short term and extrinsic to MSME sustainability and growth . A systematic approach that is comprehensive in considering and investing in risk and disaster management as a strategic , proactive imperative has been underscored during Covid-19 .”
The Covid-19 pandemic while often referred to as an unprecedented crisis has been a low probability high impact predicted event among scientists including infectious disease investigators . The pandemic has tested national level response capacity and will demand a robust recovery strategy that is cognizant and responsive to capacity to build back better in the face of disasters .
As the cost in estimate the loss of lives and livelihoods continues to mount , it is very clear that the pandemic will affect the MSME ecosystem in an unprecedented way . At a macro level , The World Bank , cut Kenya ’ s 2021 economic growth projections to 4.5 % compared to the previous projection of 6.8 % which was to be the fastest in Africa , due to the impacts of Covid-19 . This points to the need for MSME ecosystem stakeholders to act with a sense of urgency in protecting MSMEs from further negative impact , as well as buffer them from ongoing and future disasters which will have compounding shocks on the system .
Historically , consideration of disaster impacts on MSMEs has not been prioritized as a business survival and continuity imperative . The approach to risk and disaster management has been reactive , short term and extrinsic to MSME sustainability and growth . A systematic approach that is comprehensive in considering and investing in risk and disaster management as a strategic , proactive imperative has been underscored during Covid-19 .
The role of government as we contend with the complex issues and uncertainty in an already fragile business environment , supporting MSMEs to build back better will be key not only due to the Covid-19 pandemic but in how they address emerging and existing risks and disasters including cyber security
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