Act fast to save the economy and stem further job losses
Nearly a dozen companies have this year sent home thousands of employees in a bid to stay afloat in the competitive business environment. Yesterday, the country’s two top betting companies—SportPesa and Betin—announced they will be shutting down operations in Kenya.
They termed the current taxation regime as hostile, saying it had rendered their businesses untenable. Insurance firm Sanlam on Thursday said it will retrench employees aged over 50, while East African Portland Cement Company a few weeks ago, handed retrenchment letters to hundreds of employees in its bid to cut costs.
The two companies join a growing list of companies that have sent home workers including Telkom Kenya, Stanbic Bank and EABL. A part from a few firms in telecoms and banking, others are bleeding. Nakumatt, ARM Cement, Uchumi, Mumias, companies that used to employ thousands of workers are now shadows of their former self.
Mumias, which used to be the largest sugar miller, last week was put under receivership over the billions in debt it owes KCB. Besides the debt owed to lenders, farmers are yet to be paid for cane deliveries. The trouble is that there is overwhelming evidence from past cases that most companies that have been put under receivership never rise but end up being liquidated. There is more reason for the government to act fast and stem further deterioration of economic conditions that have seen many Kenyans lose their sources of income. Small businesses have not been spared either.
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They are hurting. Since the introduction of the law capping interest rates in 2016, individuals and small traders have found it more difficult to access loans to grow their businesses. This is the point where the government should come in and provide credit guarantee for small business that may not have collateral that can enable them access loans. The national and county governments should also settle pending bills.
Some investors who took loans to service government contracts have been pushed out of business over delayed pay after defaulting on their loans. Also, as the government implements its austerity to cut spending, there is need to be careful not to kill other industries such as media and hospitality with its budget cuts.
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