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The Impact of COVID 19 on Kenyan SMEs

Our preliminary high level research on IMPACT of COVID 19 on SMEs in the non-food retail sector in Kenya  (basically everyone who sells good & services directly to consumers) reveals the following:

  • Cash run rate- 40% can only last 1 month within the current cash flows( those directly affected by containment e.g bars, restaurants,event suppliers). 30% can last  only 1 to 3 months within the current cashflows
  • Decline in sales orders- 46% record declines of (over 75% in sales,23%(same),15%(26% to 50% decline) 
  • Wages- main cost component wages, 41% say wages constitute 26% to 50% of their total costs.

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With the above in mind, many SMEs are cash trapped and are looking for help from financial service providers. Thus our possible suggestions of products to financial service providers are as follows:

  •  Cash advance product – a simple advance where you can deduct upfront( All possible success fees+ interest fees) , have a moratorium for 3-6 months after which businesses can repay monthly for a specified period
  • Wage product- you perhaps have an indication of payroll, for those who pay through the banks. To prevent layoffs which is already happening for those with a large decline in sales orders (over 75%) give an advance on this basis including a moratorium for 3-6 months after which businesses can repay monthly for a specified period.

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