Covid 19 Containment Measures and Financial Performance of Small and Medium Enterprises in Nairobi Central Business District, Kenya
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Date
2024-10
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Kenyatta University
Abstract
In both developed and developing nations, SMEs are important economic engines. However, these businesses face numerous difficulties that have an impact on their financial success, in spite of their importance. COVID 19 is one of the most recent challenges. The government implemented a number of containment measures, including curfews, lockdowns, and social distance, to stop the virus from spreading. However, not much is known on how COVID 19 control measures impacted the SMEs in Nairobi, hence the need for this research. The study's target population consisted of 5000 SMEs that have licenses to conduct business in the Nairobi CBD. Primary was gathered from 370 SMEs owners. Stratified random sampling design was used for the selection of the respondents. Data collection was done using questionnaires and analysed SPSS. The respondents and their varied viewpoints on the implications of COVID-19 on the SMEs were analysed using descriptive method. Before data collection, an introduction letter and NACOSTI authorization were obtained. These helped to authenticate the study and convince the SMEs to cooperate and give data. Informed consent was sought from the respondents to make them fully aware of the study and the respondents were assured that high confidentiality would be upheld. Inferential analysis was used test the research hypothesis. This was done using correlation regression analysis. Before conducting inferential analysis, test for normality, multicollinearity and heteroscedasticity were done to determine the suitability of the data for regression analysis. The key limitation faced during the study included a reluctance by the SMEs to give data pertaining to financial performance and reaching out to the SMEs owners to partake in the study due to the spread of the virus. Based on the analysis, correlation coefficient of lock down was -0.614 which demonstrated a strong negative correlation between lock down and SMEs' performance. The study identified that the SMEs were impacted by curfew as indicated by a correlation coefficient of -0.406 and social distancing as indicated by correlation coefficient of -0.539. Regression analysis indicated that COVID 19 containment measures explained 73.96% of the performance of the SMEs. The study concluded that distribution of products and sourcing of raw material was highly disrupted by lock down. The study also identified that curfews had an impact on SMEs. Additionally, the study found that social distancing greatly limited the number of customers served by SMEs particularly in the service and transport sectors. To help the SMEs cope with COVID 19 containment measures, lending institutions are urged to actively consider giving SMEs loans based on favorable terms to enable them rebuild their ventures. The SMEs owners are recommended embrace saving and ensure that the funds they make is used properly. They are also recommended to adopt digital platforms and that many of them do not use them for businesses purposes. There is a need for the government to have a national disaster intervention fund to support the SMEs after COVID19. Regarding further studies, the study suggests the need for additional research in other counties in order to get better insights on how SMEs were impacted by COVID 19 containment measures. Also, conducting similar studies in other counties would help to compare the COVID effects in different areas. Additionally, it would be prudent to conduct other studies focusing on large firms. The findings will enable policy makers to better understand the challenges faced by SMEs and design effective policies to enhance their resilience and support job creation and income generation during economic downturns. For SME owners, the findings will highlight the effects of containment measures, enabling them to implement strategies to navigate the pandemic and prepare for future disruptions. Additionally, the research contributes to the academic literature by expanding knowledge on the impact of COVID 19 pandemic on business performance.
Description
A Research Project Submitted To The School Of Business, Economics And Tourism In Partial Fulfillment Of The Requirements For Degree Of Master Of Business Administration (Finance) Of Kenyatta University, October 2024.
Supervisor
Vihcent Shiundu Mutsweje