SMEs key to surviving Covid-19 aftermath
Photo credit: Nahavand & Farham (Insamer)
Never has the world experienced a global economic catastrophe as instigated by the novel coronavirus pandemic in recent times.
By and large the pandemic brought both the developed and developing economies to their knees.
A public health crisis caused jitters among nations sending shock waves to the global citizenry.
The damage caused so far is irrefutably one of the most devastating economic crisis in living memory.
Small-and medium-sized enterprises (SMEs) have been adversely affected despite the fact that they play a vital role in the economy.
It will take an arm and a leg to resume to normalcy although all hope is not lost.
A critical focus on SMEs strengthening and support through financial access and creation of business enabling environment will go a long way in collecting the broken pieces.
According to a journal of banking regulation (2021), SMEs were projected to support 99.8% of the entire nonfinancial business enterprises in 2018, employed 66.6% of the working population inducing 56.4% of value in that sector.
In Kenya, SMEs account for 80% of the working population a clear indication that the pandemic wreaked havoc in the most unprecedented way (UNDP, 2015)
The best way to fast-track the already crippled economy is to lift the financial barriers that have continued to deny SMEs financial gateway.
New investment projects by SMEs have been derailed courtesy of existing financial access barricades.
SMEs have received credit with shorter repayment periods, fewer funding than requested, high interest rate and stiffer bank guarantee requirements among other restrictions.
To revitalize the economy, policymakers should channel their attention on legislations and institutions that empower SMEs on a broader perspective to overcome the financial deficiencies.
Time is of the essence as delay is precarious.