Training and micro loans help small businesses weather Covid

In 2019, Reuben Muigai started a salon and barbershop at Kahawa West City Council Market. Being a busy location, the number of clients grew by day and profit was good.

Then, as he made plans to expand the business the coronavirus pandemic struck, starting a huge crisis for enterprises.

“My business was doing well till the corona pandemic struck. With social distancing, clients stopped coming lest they contract the virus,” says Mr Muigai.

But around that time, he got connected to a programme that provided support to keep him afloat.

The Micro-Enterprises Strengthened for Pandemic Adaptation and Resilience in Kenya (mSPARK) programme, launched by TechnoServe and the Mastercard Foundation, gives digital and financial support to micro, small and medium-sized enterprises to help them survive the pandemic.

Muigai registered for the programme, received online business training for two months and was given a loan of Sh40,000 in November last year.

Though there were no clients coming to the shop at the time, he feared losing the premises over rent arrears. The loan helped him pay rent.

He also bought a fridge and stocked water, sodas, yoghurt and energy drinks that gave him some little money.

With time, as Covid-19 infections reduced, business started picking up. Muigai has since expanded, bought another set of shaving machines and also opened a stall where he sells shoes.

“I have employed three more people; two at the barbershop and salon and one at the shoe stall,” he says, adding that he now manages his finances better.

He appreciates the training by mSPARK, which involves customer relations, products display, diversification, managing business and record keeping.

Another beneficiary of the programme is Moses Wang’ang’a who operates a chemist in Ujamaa area, Mombasa County.

Mr Wang’ang’a, also a clinical officer, says the pharmacy was doing well before the pandemic and he planned to expand.

However, Covid-19 cost many people jobs and many of his clients sought drugs on credit.

“I knew most of the clients who came to buy on credit. I could not deny them drugs, which I am sure they needed for treatment,” says Wang’ang’a.

But the challenge was paying back. He says around 70 per cent of the debtors are yet to pay.

With most of his money unpaid, he was unable to adequately restock. The business started stalling, with important and basic drugs missing on the shelves, and he accumulated rent arrears.

Through his networks, he heard about the mSPARK programme and registered for the training. He also received a loan of Sh40,000.

He used the cash to stock up on fast-moving drugs and his business started picking up. He also added more shelves.

“The loan itself was a godsend but the training was also very important,” says Wang’ang’a.

“l didn’t even know display of goods is an important factor in business. ”

Cyprian Amakalu, mSPARK Programme Manager at TechnoServe, says the initiative was started to help MSMEs remain afloat and sustain jobs during the pandemic.

It targeted Nairobi, Mombasa and Kilifi, counties that were then experiencing the highest rates of Covid infections.

“We resolved to support six business categories that had an impact during the pandemic period; shops, groceries, chemists, eateries, tailors and kinyozi and salons,” says Mr Amakalu.

The programme targeted to work with 28,000 people; 70 per cent of them youth and 60 per cent women with financing through repayable loans of between Sh5,000 to Sh40,000.

The loans were free of interest and repayable within 60 days.

“Although there was no requirement for guarantors, we did background checks during recruitment,” Amakalu says.

“For instance, beneficiaries must be living in Nairobi, Mombasa or Kilifi, involved in either of the six categories of businesses, and for at least one year.”

Also, before receiving a loan, beneficiaries had to go through training and knowledge check to measure their understanding of the training.

Beneficiaries were identified by community mobilisers. Due to the pandemic and social distancing, training was done online, on WhatsApp groups by sharing messages, video links, tips, infographics and other content.

Those without smartphones received the training through SMS.

The programme is impressed with the results of the training and funding.

“We can authoritatively say that for any business we have trained, there is an improvement in increasing sales or employing more people, and these are ripple effects to the whole economy,” says Amakalu.

However, the money is not enough. For instance, chemists needed more money yet the highest they could get was Sh40,000.

For Rose Akoth, whose client base was students at the Technical University of Mombasa, everything came to a standstill after the institution was shut following the pandemic.

“Over 80 per cent of my customers are students. So when the institution closed, it became hard to pay rent and fend for my family,” she says.

Ms Akoth runs a grocery shop in Tudor, Mombasa.

She also got a loan of Sh40,000 from mSPARK that turned the business around.