13% of businesses shut during COVID-19 pandemic yet to reopen: KEPSA

13 per cent of businesses shutdown during the COVID-19 pandemic or an equivalent one enterprise for every ten shut are yet to resume operations.

This is according to a new survey by the Kenya Private Sector Alliance (KEPSA) conducted across September and October which reveals a low recovery of macro-economic conditions on the back of an ease to COVID-19 restrictions.

According to the survey which featured 428 respondents across various economic sections, about 50 percent of business were shut on the back of the outbreak of coronavirus.

23 per cent of the businesses shut operations for less than a month, another 50 per cent closed shop for 1-3 months while the remaining 27 per cent were shut for 4 to 6 months.

Only 37 per cent of the shut business have since reopened leaving the continuity of the other 13 per cent in jeopardy.

The business closures have largely hit out at micro-business with 75 per cent of enterprises with one to 10 employees having closed shop following the advent of the pandemic.

In comparison, 73 per cent of small enterprises, 69 per cent of medium businesses and 61 per cent of large firms have remained open throughout the pandemic.

Businesses in the tourism and education sectors have been the worst hit with 92 per cent and 57 per cent of the enterprises in the categories having shut down respectively.

33 per cent of businesses in tourism are still shut while only half of the businesses in the education sector have reopened.

The business closures have preceded industry wide job cuts with 39 per cent of the surveyed firms indicating they had let go part of their staff base.

Enterprises in wholesale & retail, tourism, education and construction have led in job cuts with 75, 67, 57 and 46.8 per cent of entities in the segments indicating to have declared redundancies.

Meanwhile, businesses in finance and insurance have reported zero layoffs while 13 per cent of enterprises in energy and manufacturing has pointed to new hires in the period.

The findings from KEPSA mirrors the dark side of the current state of the economy with 51 per cent of firms indicating they have barely recorved to half pre-COVID-19 levels.

On the contrary, the Stannbic Bank Purchasing Managers Index (PMI) in October showed private sector activity at its highest on record with the continued ease of COVID-19 restriction measures aiding higher output and a resumption in hiring.

Meanwhile, the substantive hit on tourism and education sectors was recorded in the Kenya National Bureau of Statistics (KNBS) quarter two GDP print which showed Kenya’s first economic contraction since September of 2008.