Facebook’s Global State of Small Business Report highlights the Impact of COVID-19 on Kenyan SMBs

Facebook in collaboration with the World Bank and Organisation for Economic Co-operation and Development (OECD) have released the Global State of Small Business Report that analyses the impact of COVID-19 on Small and Medium-Sized Businesses (SMBs) globally. 

The report derived from the Future of Business Survey, was conducted between January and May this year and sampled 30,000 small business leaders in over 50 countries including Kenya. According to the survey, more than a quarter of SMB’s said they closed between January and May this year (due to COVID-19) – but that figure rose to more than 50% in some countries. A third of SMB’s currently operating reported that they had reduced their workforces, a worrying sign of what could be a lengthy jobs crisis. Nearly two-thirds of small businesses in operation confirmed that sales are down in comparison to the  same period last year. Small businesses the tourism and hospitality sectors are some of the hardest hit. Globally, 54% of tourism agencies and 47% of hospitality and event SMBs reported that they were closed at the time of the survey. Micro businesses, which are SMBs owned and operated by one individual, have closed to a greater extent than those that have multiple employees.

Across SSA, Kenya has been most affected by job losses due to COVID-19 pandemic with 65% of operational SMBs on Facebook in Kenya reporting that they have reduced their number of employees as a result of the pandemic. While 45% of operational SMB’s on Facebook in South Africa,  45% in Nigeria and 47% in Ghana reported that they reduced their employees as a result of the pandemic. Small businesses in Kenya have also seen a significant dip in revenue generation with 75% of Kenyan SMBs on Facebook reporting lower sales this year than last year while small businesses on Facebook in  Ghana, Nigeria and South Africa reported, 56%, 59%,  67% lower sales respectively. The only way for SMBs in Kenya to survive the pandemic is to pivot to digital, for example in Ireland 65% of operational businesses on Facebook reported that 25% or more of their sales were made digitally in the past month this is considerably higher than Kenya where 46% of operational businesses on Facebook reporting the same.   

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Ghana reported 68% the highest number of small businesses on Facebook engaging in revenue operating activities while Kenya and Nigeria reported 62% and South Africa reported 57% of the same. Taiwan and Czech Republic reported 96% and 94%(respectively) of their small businesses on Facebook engaging in revenue generating activities presenting an opportunity for more Kenyan SMB’s on Facebook to consider engaging in revenue operating activities. On a higher note, both male and female owned small businesses operational on Facebook in Kenya feel optimistic about the future of their business with 65% of female-owned and 66% of male owned businesses confirming their optimism about the future in comparison to overall 44% of small businesses operational on Facebook in South Africa feeling optimistic about their future. 

The report also captured the support offered by governments globally to SMBs during this period where some governments  have helped offset the impacts of COVID-19 by providing financial assistance.  At the time of the survey, almost a quarter (23%) of SMBs reported that they were receiving financial support in response to the pandemic, the majority of this in the form of government grants and loans (about 60% in total). The report highlights, however, that this is far from universal across the sample with 27% of small businesses reporting that there was no assistance available at the time of the survey.The report confirms that businesses across the globe are spending time during the lockdown to prepare to re-open and are adapting their business models by developing an online presence. The report also  indicates that the path to recovery for small businesses is not certain and they need more support including salary subsidies, tax deferrals and access to loans and credit to offset ongoing cash flow and demand-side concerns.

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The Facebook Global State of Small Business report released today will be followed by 4 monthly trend updates that will focus on different topics like;  Access to Finance, Gender Gap, Digital Engagement and Micro-businesses. The study will be concluded by a final report that will explore the trends that have emerged over the past six months.

The Facebook Global State of Small Business report can be accessed here.

Odipo Riaga
Managing Editor at KachTech Media
Odipo Riaga on FacebookOdipo Riaga on Linkedin

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