How Kenya plans to help its SMEs weather COVID-19 crisis

Kenya's small and medium enterprises (SMEs) have been hit hard by the global COVID-19 pandemic, leaving many struggling to stay afloat. To help cushion the economic blow, the government has introduced stimulus measures such as reducing value-added tax and corporation tax. However, experts, like George Bodo, Director at Callstreet Research and Analytics LTD, believe that these measures may not be enough to support SMEs effectively. Bodo points out that the current tax reductions do not help those who have already lost their jobs or closed their businesses, emphasizing the need for more targeted support. He suggests that a rescue fund offering grants or loans could be the key to helping struggling businesses restart their operations. With the informal sector employing a significant portion of the population in Kenya, it is crucial to find alternative solutions to ensure that these businesses survive the crisis. Bodo also discusses the challenges faced by export processing zones companies, which have lost international markets due to the pandemic. Despite the government's decision to allow these companies to sell up to 100% of their produce locally, Bodo remains skeptical about the impact on their profits due to limited domestic demand. The interview highlights the importance of a comprehensive fiscal response to address the dual health and economic challenges posed by the pandemic. As advanced governments around the world roll out massive stimulus packages, Kenya faces the urgent need to develop a sustainable strategy to support its economy through these unprecedented times.