How Covid has shaped businesses, households two years on  

At about 10am on Tuesday morning, Mr Nicolas Motende, a matatu driver, walked around the Tea Room matatu terminus in Nairobi, chatting with colleagues and observing how passengers were boarding vehicles.

Mr Motende had queued for four days waiting for his turn to ferry passengers to Kisumu. He thought about how he would spend his expected Sh2,000 income after the Nairobi-Kisumu round trip, perhaps the only journey he would make this week.

Since Covid-19 hit Kenya in March 2020, there are things he has come to accept as part of his life – like skipping meals and surviving on less than a half the income he made in 2019.

In an interview with the Nation, he explained how the pandemic has altered the core of Kenya’s public transport sector – the matatu industry – since March 2020.

“Business has declined so much that sometimes I come to work and stay for three days without making a single trip yet in this job we get paid by the trips we make,” he said. 

“I came here on Friday, and as we speak, I expect to make the next trip to Kisumu tomorrow (Wednesday). I earn Sh2,000 per round trip and will send half the amount to my family and live on the rest. This means that I have to sacrifice some things – after breakfast, I skip lunch and wait until supper.”

Before the pandemic hit the economy, the driver would make about four round trips on the Nairobi-Kisumu-Kakamega route weekly, earning about Sh8,000 and making about Sh24,000 for the vehicle’s owner. Today, he manages two weekly round trips at best.

Over the past two years, he has seen some investors pull out of the business altogether, parking their vehicles at home. Others who had bought vehicles with bank loans saw them auctioned because they failed to repay.

The ripple effect is immense on thousands of families whose breadwinners have lost livelihoods as drivers, conductors, touts and other operators in the matatu industry were left jobless. 

Pushed into poverty

Other businesses that also rely on the sector such as hawking, kiosks, eateries, garages and car washes have also felt the pinch.

“Sometimes I look at someone with whom I worked and who lost his job due to the pandemic and feel I can’t be at peace with myself if I don’t share with him the little I’ve earned,” Mr Motende said.

“I know if I give him Sh100, he can buy a pack of maize flour that day, because most of the drivers who have lost jobs come to the terminus just to hang around as they have nothing else to do.”

Of the more than five matatu saccos that ply the Nairobi-Kisumu-Kakamega route, he estimated that hundreds of their drivers had lost their jobs. The sacco he works for – Safari – has lost 40 of its 70 vehicles plying that route.

“I also had a small business that supported my finances but it collapsed during the pandemic. The prices of basic commodities such as sugar, flour, soap and others have increased drastically, changing life completely,” he said.

To put food on the table, he and his wife must combine their efforts. He and his fellow drivers have also formed chamas to help them pay bigger expenses such as school fees.

Mr Motende’s experience illustrates the impact of the Covid-19 pandemic, which resulted in the loss of millions of jobs and the closure of thousands of businesses, altering the lives and livelihoods of millions of Kenyans and pushing households into poverty.

The matatu sector is one of Kenya’s biggest employers and drivers of the economy. Measures imposed to contain the spread of the virus since April 2020 changed how it and other sectors operate, causing damage that will take years to repair.

“When Kenyans don’t have money, they don’t travel. Movement has reduced drastically since many SMEs that supported our operations collapsed and people have restricted themselves to travelling only when necessary,” said Mr Simon Kimutai, the Matatu Owners Association chairman.

Business closures

“The effects have fallen not only on us but also other businesses whose survival relies on matatu operations, such as kiosks where drivers eat, hawkers who sell merchandise to travellers in vehicles, mechanics, petrol stations and spare part shops.”

In December last year, the Central Bank of Kenya (CBK) disclosed in a report that 35 per cent of micro and small enterprises (MSEs) – which employ less than 10 people and constitute 98 per cent of the economy – closed down between February 2020 and July 2021.

The Finaccess MSE Covid-19 Tracker Survey, which tracked more than 600 businesses through the period, reported that by July 2021, 62 per cent of the businesses earned less than their incomes pre-Covid-19.

“Meanwhile, business closures increased in 2021, with 35 per cent of business owners who had businesses pre-Covid no longer involved in any business activity in July 2021. In July 2021 only 32 per cent of MSEs claimed to have savings, down from 60 per cent in February 2020 (pre-Covid). There has been little recovery since then,” the report said.

At the company registry, while the number of new business names registered increased from 56,763 in the year to June 2019 to 101,674 in the year to June 2021, the number of firms struck off the registry also more than doubled from 992 to 2,540 in the two years.

Between July 2021 and January 2022, some 1,181 companies had been struck off the register.

In the tourism industry, the ministry’s 2021 Tourism Sector Performance Report said that a total of 1.2 million jobs were lost, with an estimated Sh152 billion in labour income losses.

“The biggest loss was borne by passenger transport (Sh63 billion and 216,000 workers), followed by shopping (Sh43 billion and 486,000 workers) and accommodation, which lost Sh26 billion and 295,000 workers,” the report stated.

The manufacturing sector indicates that though its jobs stagnated at around 300,000 since 2016, it has not recovered from the over 40,000 job losses since the pandemic struck.

Huge losses

For bars and restaurants, which were closed for over a year, players still insist that about 15,000 bars have not reopened and 90,000 workers rendered jobless are still suffering.

“Full-scale economic recovery after the overwhelming economic shock caused by the confluence of debt distress and a global pandemic is not guaranteed unless the jobs that were lost in all sectors, including manufacturing, are restored,” the Kenya Association of Manufacturers (KAM) stated in its 2022-27 manifesto.

Ms Jacqueline Mugo, the Federation of Kenya Employers (FKE) executive director, told the Nation that the uncertainty caused by slow recovery from the impact of Covid-19 and this year’s election campaigns mean that little improvement will be made this year.

“Supply chains have not fully recovered across the globe. The situation generally is fairly fluid and uncertain and businesses don’t do well in such an environment,” said Ms Mugo.

Even though she didn’t have the exact number of workers who have lost jobs since the pandemic hit Kenya, Ms Mugo said some of the jobs lost will never be regained while companies will continue with work-from-home arrangements with their staff this year.

Since 2020, companies in Kenya have recorded huge losses in revenues while others that survived on a thread, particularly in hospitality and transport, have collapsed.

Over the two years, the public debt has also increased by 34 per cent from Sh6.1 trillion in February 2020 to Sh8.2 trillion by December 2021, increasing the burden of the government’s mandatory commitments and stifling resources that could be used to ease the lives of millions of poor households.

Part of the burden has been passed on to citizens through higher taxes for critical commodities such as fuel and cooking gas that in turn have raised the prices of other commodities, leaving many living hand to mouth.

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