Maandamano in Kenya and Small businesses

 The ongoing "Maandamano"  in Kenya have a devastating and disproportionate impact on small businesses (SMEs), which form the backbone of the Kenyan economy. These enterprises, already grappling with a challenging economic environment, are often pushed to the brink of collapse by the disruptions and damages caused by protests.

Here's a breakdown of the key impacts:

1. Direct Economic Losses:

• Business Closures and Lost Sales: During protests, particularly in affected urban centers like Nairobi's CBD and other major towns, businesses are forced to shut down for safety reasons. This immediately leads to a loss of daily revenue, which is critical for SMEs that often operate on thin margins and depend on daily sales for survival. Many daily wage earners, who rely on these businesses, also lose their income.

• Property Destruction and Looting: A significant and heartbreaking consequence is the widespread vandalism, looting, and even arson targeting small shops and stalls. Owners report millions of shillings in losses due to stolen merchandise, damaged infrastructure, shattered windows, and burnt premises. This can be an insurmountable setback for entrepreneurs who have invested their life savings into their businesses.

  • For example, in the recent protests around June 25th, businesses in areas like Mfangano Street, Moi Avenue, Khoja, and OTC in Nairobi's CBD experienced extensive damage and looting.

• Interruption of Supply Chains: Protests can disrupt transportation and logistics, making it difficult for SMEs to receive supplies or deliver their products. This can lead to shortages, increased operational costs, and an inability to meet customer demands.

2. Increased Operating Costs and Risks:

• Security Concerns: Businesses may need to invest in additional security measures or face the constant threat of damage and theft, adding to their overheads.

• Higher Insurance Premiums (or lack thereof): While some businesses have insurance against political risks, a significant number of Kenyan SMEs (over 50% according to some reports) lack such coverage due to high costs or a perceived mismatch with their needs. For those that are insured, widespread claims during protest periods can lead to increased premiums in the future, further burdening them. Data from the Insurance Regulatory Authority shows a significant increase in fire industrial policies claims related to protests in recent years.

• Borrowing Challenges: Many small businesses operate on loans. When their operations are disrupted or destroyed, their ability to repay these loans is severely compromised, potentially leading to an increase in non-performing loans for banks and further financial distress for the entrepreneurs.

3. Reduced Consumer and Investor Confidence:

• Dampened Consumer Spending: Protests create an atmosphere of uncertainty and fear, causing consumers to stay home and reduce non-essential spending. This leads to a sustained decline in foot traffic, especially for retail, entertainment, and hospitality businesses that rely on disposable income. The psychological impact can take months to recover.

• Shift in Consumer Behavior: Some consumers may shift towards online purchases or larger, more secure outlets during periods of unrest, putting smaller, physically-located businesses at a disadvantage.

• Reduced Investor Confidence: Political instability signaled by frequent protests discourages both local and foreign investment. This translates to limited access to capital for SMEs, hindering their ability to expand, innovate, or even sustain themselves in an already tough economic climate. Even when investors are willing, they may demand higher interest rates to compensate for the perceived risk.

4. Impact on Livelihoods and Employment:

• The MSME sector is a major employer in Kenya, providing livelihoods for millions. When these businesses are destroyed or forced to close, countless individuals are rendered jobless, further exacerbating the country's already high unemployment rates, particularly among the youth. This has a ripple effect on families and communities, as people struggle to afford basic necessities.

Government and Stakeholder Response:

The government acknowledges the severe impact on MSMEs. The Micro, Small and Medium Enterprise Development Principal Secretary has indicated that the government is considering collaborations with insurance companies to cushion the private sector from losses due to violent protests. There are also calls to facilitate the registration of MSMEs for better coordination and support. However, with a large percentage of SMEs uninsured, finding effective solutions remains a significant challenge.

In essence, while protests are a form of expression for grievances, their destructive elements inflict severe and often irreversible damage on small businesses, impacting the lives and livelihoods of a vast number of Kenyans and hindering the nation's economic progress.