Peter Fry is the Executive Director at Kua Ventures /HANDOUT
It’s no secret that the past few years have been tough on
Kenyan businesses. If you’re an entrepreneur, you probably know exactly what
I’m talking about. From the ripple effects of COVID-19 to rising costs, higher
taxes, and a weakening shilling, many businesses have found themselves in
survival mode. And now, with Kenya’s sovereign credit rating recently
downgraded to B-, staying afloat has never felt harder.
Entrepreneurs
are resilient and resourceful, but they’re tired. Tired of constantly fighting
uphill battles. Tired of shouldering risk without enough support. The big
question on many people’s minds is: Where do we go from here?
Survival has come at a cost
If you walk around Nairobi today or visit towns across the
country, you’ll notice the scars. Shops closed. Offices downsized. Small
businesses operating on a shoestring budget, their owners doing everything they
can just to keep the lights on.
And it’s not just businesses that are hurting. Households
are under pressure, too. A recent report found that nearly 60% of Kenyans are
now dipping into their savings just to service debt. That’s not sustainable.
Many entrepreneurs I talk to are asking the same question: We’ve
made it this far, but at what cost? And will things ever get easier?
What we learned from the pandemic
When COVID-19 hit, the world came to a standstill. Here in
Kenya, industries like hospitality and tourism were decimated almost overnight.
Retailers, manufacturers, and service providers all took massive hits.
But in the middle of that chaos, we saw something
remarkable. Restaurants quickly pivoted to delivery services. Manufacturers
started producing masks and sanitisers. Retailers who had never considered
e-commerce were suddenly selling online. It was an incredible display of
ingenuity and adaptability—something Kenyan entrepreneurs have always been
known for.
That same spirit is what’s kept many businesses going, even
as new challenges emerged.
The squeeze is getting tighter
Since the pandemic, things haven’t exactly bounced back.
Global supply chain issues, inflation, and rising fuel prices have hit
businesses hard. And for a country like Kenya, which imports so much, the
weakening shilling has made everything more expensive.
This has meant higher costs across the board—for raw
materials, transportation, and everyday goods. Consumer spending power has
shrunk, and businesses have had to adjust by offering cheaper products, cutting
costs, and running promotions. But all of that eats into already thin profit
margins.
The funding gap
Not long ago, Kenya was buzzing with investment. In 2020 and
2021, even during the pandemic, we saw record venture capital inflows. Startups
were raising millions. It felt like Nairobi was the Silicon Savannah people had
always dreamed of.
Fast-forward to today, and the story looks very different.
Funding has dried up. Banks are playing it safe with government securities
instead of lending to SMEs. Interest rates are high, and venture capitalists
are focusing on safer bets—companies that are already profitable.
For many small businesses, this has been devastating. They
can’t grow because they can’t access affordable capital. And without growth,
they risk stagnation or worse.
Taxes and red tape
The recently passed Finance Act has made life even harder
for entrepreneurs. New levies, higher taxes, and increased compliance costs are
squeezing businesses from every angle. VAT, PAYE, corporate tax—it’s all adding
up. And for small businesses, the weight is often too much to bear.
On top of that, the regulatory environment can be painfully
slow. Getting licenses, permits, or approvals is time-consuming and expensive.
If we want to encourage entrepreneurship, we need to make it easier, not
harder, for people to do business.
So, what’s the way forward?
Despite all these challenges, I remain hopeful. And that
hope comes from the entrepreneurs I meet every day—the ones who refuse to give
up.
Here’s what I believe can help:
Resilience isn’t enough
Kenyan businesses have shown incredible resilience. But
resilience alone won’t sustain us. We need policies that back entrepreneurs,
funding that enables growth, and a culture that celebrates local businesses.
As a country, we’ve come through some tough times before—and
we will again. But it will take all of us: entrepreneurs, consumers,
policymakers, and investors, working together to create a business environment
where Kenyan companies can dream big and grow strong.
Because when our businesses succeed, Kenya succeeds.
Peter Fry is the Executive Director at Kua Ventures.
