Central Bank of Kenya (CBK) Governor Patrick Njoroge has revealed that 75 percent of small businesses risk being closed in the next 30 days.
Data collected by Kenya Association of Manufacturers (KAM) show that there are about 7.41 million Micro, Small, and Medium Enterprises (MSMEs) in Kenya, with only 1.56 million of them being licensed.
According to the KAMs data, 5.85 million MSMEs are not licensed, which means that at least 5 million small businesses are staring at potential closure.
CBK Governor, speaking in a virtual press conference, gave an update on the status of the economy in the country and stated that something ought to be done to ensure that the small firms survive.
According to Njoroge, whatever policy action that will be applied to help the MSMEs would have to go beyond finance into a ‘finance plus’; which includes linkages to other markets.
He noted that according to a survey, three-quarters of the firms would be in a critical state by the end of June.
The small businesses contribute an estimated 40 percent of Kenya’s GDP, with most of them falling in the informal sector, often dubbed as the lifeblood of the economy.
Reports show that these small companies create employment to over 14 million Kenyans and are defined by the government as businesses that engage between 1-99 workers.
According to an analysis by the Kenya National Bureau of Statistics (KNBS), which was released early this year, approximately 400,000 MSMEs are not able to survive to their second anniversary.
Governor Njoroge, however, said that despite the covid-19 pandemic, the Kenyan economy is so far on a steady trajectory.
The Governor said that the Kenyan economy grew by 5.4 percent in 2009, and the expected data for Quarter 1(Q1) 2020 is relatively strong, according to leading indicators.
“The indicators for April are mixed, but the forecast for economic growth in 2020 remains as announced,” the Governor said.