Small businesses and workers in the informal sector are struggling under the lockdown in Nairobi, but many are ineligible for government funds meant to help the vulnerable. Tom Collins reports from the city
Every morning Lilian Minacye walks for two hours from a slum in the outskirts of Kenya’s capital city to an unremarkable street corner in a wealthy neighbourhood.
Along with more than 50 other women perched on the side of the road, the mother-of-two sits with her cleaning equipment and patiently waits for gig-work as one of Nairobi’s many unemployed househelps.
Before Covid-19, only a few househelps were without regular work and this open marketplace for services was barely visible. But as Kenya enters its third month of dealing with the deadly virus, the city is dotted with clusters, mostly of women, all hoping that a flashy car will drive by and employ their services for a day.
“Ever since corona we can’t get work,” Minacye says. “It’s a hard period; we can’t eat and we can’t pay our rents.”
Among Minacye’s group, around 40 women have lost their jobs. Most middle-class houses in Nairobi employ at least one worker to help with the house, children or garden.
Some employers have dismissed their workers, fearing that they will act as transmitters of the virus. Others have left the country as the large expat community that once accounted for a sizeable portion of the market has been drastically reduced.
Pauline Aduma was made redundant shortly after the American couple she worked for returned to the US. Without a salary, her family survives on the small amount of money her husband earns as a self-employed dress maker. They are struggling to pay school fees and the monthly $80 in rent.
“I have just been at home, hoping on God for the best,” she says.
According to government statistics, 83% of Kenya’s population makes a living in the informal sector. The partial lockdown in Nairobi – which includes the shutdown of non-essential services, a dawn-to-dusk curfew, the suspension of public gatherings, social distancing measures and the inability to leave or enter Nairobi county – has made life very difficult for this demographic, which typically lacks access to financial tools.
Kenya’s flower industry, which exports most of its produce to Europe, was one of the first sectors to be negatively affected by the ban on international air travel. That has impacted Nairobi’s flower sellers, who erect small wooden stalls across the city and who thrive off businessmen and politicians buying roses for their “sidechicks”.
With social spaces closed until further notice and most people remaining indoors, Anthony Kamondia laments a decline in sales that has already reached 20%. “People don’t have any money to buy food so they are not buying flowers,” he tells African Business.
Small businesses struggle to stay afloat
Salons, restaurants and bars were some of the first businesses closed after Kenya’s first Covid-19 case was announced on March 13.
Coco Jambo, a nyama choma or roasted meat joint, has closed five of its restaurants while one remains open for deliveries, says branch manager Francis Okoth.
“I would say that currently we have lost more than 70% of our revenues,” he says. “The risk of going bankrupt is almost 80%; and that is not only for businesses in our sector.”
Apart from the government lifting the lockdown, Okoth believes there is little that can be done to keep Coco Jambo afloat. Although the Central Bank of Kenya has changed banking regulations to encourage commercial lending, he believes that securing a loan in the current climate will be extremely difficult.
Around 80% of Coco Jambo’s staff have already been furloughed – neither the company nor the government will be paying them during this period – as the business attempts to reduce its overheads.
However, the lack of income means that the restaurant chain will struggle to pay Nairobi’s notoriously high rents even if the business has restructured elsewhere.
As the pressure mounts on the government to lift its partial lockdown – which it has extended for another three weeks from 16 May – some businesses have started to disregard the government’s advice on containing Covid-19.
One restaurant visited by African Business was full of lunchtime customers, though the waitress insisted that they were “only open for deliveries”. The restaurant is a popular haunt for businessmen and politicians, sparking allegations that authorities turn a blind eye to some businesses which are better connected than others.
Addressing the nation, President Uhuru Kenyatta announced the extension of the country’s partial lockdown by 21 days, making reference to cases where people have broken the rules. Some have sought to ignore the ban on inter-county travel in the most affected areas by dodging barriers and police checkpoints, he said.
“I know there is growing pressure to ease the measures put in place for all of us to get back to normal. Other countries eased their measures and later suffered as they witnessed a spike in the rate of infections,” he said.
Vulnerable citizens suffer hardship
As elsewhere, the government is torn between minimising the spread of the deadly virus and preventing economic hardship, which may cause even more deaths in lower-income countries, experts have warned.
Ghana was the first African country to lift its lockdown on 20 April, citing concern for the most vulnerable in society. It has since registered a fivefold increase in Covid-19 cases, while conducting the second highest number of tests after South Africa.
Regardless of when Kenya decides to lift its lockdown, the government has been criticised for failing to comprehensively support its most vulnerable citizens. The measures adopted so far include 100% tax relief for persons earning less than $240 a month, the reduction of VAT from 16% to 14% and the reduction of corporation tax from 30% to 25%. Yet none of these measures will apply to the 75% of the population whose economic activity is off the books, say critics.
“It looks good on paper but the informal sector didn’t pay these taxes in the first place,” Charles Warria, chief operations and learning officer at iGov Africa, told a webinar panel hosted by the Kenyan publication The Elephant.
The International Labour Organisation has said that governments should extend their bailout programmes to include “targeted and flexible measures to support workers and businesses, particularly smaller enterprises, those in the informal economy and others who are vulnerable”. Informal workers in Africa could lose 81% of their income in the second quarter, it says.
At the beginning of the pandemic, Kenya set aside $93m for cash transfers to the most vulnerable sections of society. While the government claims it is beginning to distribute these transfers, many of those eligible are yet to receive payment.
“We wrote our names and numbers on a list,” says Minacye. “They said they would give us $20 a week but they didn’t send any money.”
Meanwhile, the government has received funding from various partners including $739m from the IMF, $1bn from the World Bank and around $8m from Denmark. Although these funds will be used to support other sectors and the health response, many believe that the government should allocate significantly more support to the informal sector and established businesses.
The branch manager from Coco Jambo believes it could start by introducing subsidies on basic foodstuffs like rice, maize and cooking oil.
“The government still has many opportunities to explore to help businesses remain afloat,” he says.