• A survey by GeoPoll indicates Kenya had the highest number of entities indicating they laid off or opted to cut salaries at 52.56 per cent, followed by Nigeria (47 per cent).
•Ethiopia and South Africa had lower incidences of layoffs at 37.96 per cent and 33.33 per cent, respectively.
Image: ANDREW KASUKU
Kenya’s MSMEs had the highest number of lay-offs, temporarily halting of work and salary reductions for employees in the last two years among key economies in Sub-Sahara Africa, a report indicates.
This is from a survey by global firm–GeoPoll conducted in Ethiopia, Kenya, Nigeria and South Africa.
The “Africa MSME Pulse Survey- 2024 indicates “a troubling trend” of workforce reductions, with 40 per cent of respondents indicating they had to lay off staff in the past two years as a way of staying afloat in a tough operating environment.
Kenya had the highest number of entities indicating they laid off or opted to cut salaries at 52.56 per cent, followed by Nigeria (47 per cent).
Ethiopia and South Africa had lower incidences of layoffs at 37.96 per cent and 33.33 per cent, respectively.
“This variance underscores the differential impact of economic and political challenges faced by businesses, potentially exacerbated by factors such as political instability, inflation, and the lingering effects of the Covid-19 pandemic,” the report reads in part.
The survey which covered the first quarter of this year, involving 418 businesses distributed across the selected countries, also indicates a cautious outlook towards hiring, with 40.78 per cent of
respondents across the four countries expressing that they were not likely to hire in the short-term, compared to 32 per cent in 2023.
GeoPoll has attributed the hesitancy to the uncertain business environment and the need for businesses to maintain operational efficiency amidst fluctuating market conditions.
Adding to the complexity of the employment landscape is the challenge of finding qualified or talented staff, which remains a significant hurdle for MSMEs.
A notable 35.58 per cent of businesses described finding suitable staff as 'difficult' or 'very difficult', highlighting a gap in the skills market that needs addressing.
Ethiopia recorded the highest percentage of respondents (29%) finding it difficult to source qualified staff, pointing to a potential skills mismatch or inadequacies in the local labor market’s ability to meet the demands of growing businesses.
Conversely, Kenya showed a somewhat brighter picture, with the largest segment of respondents indicating that finding talent was 'very easy', probably reflecting the effectiveness of Kenya’s educational and vocational training programmes in equipping individuals with the skills required by the modern business sector.
Even so, there remains concerns over the business environment.
In 2023, a majority of 55.33 per cent of MSMEs felt the business environment had improved from the previous year.
However, fast forward to 2024, this sentiment has dramatically shifted, with only 23.64 per cent holding onto that optimism and a significant 65.71 per cent across the four countries saying the environment has worsened.
“This drastic change in perception underscores the impact of various economic pressures, including inflation, supply chain disruptions, and political ramifications, which have intensified over the year,” GeoPoll notes.
The situation appears particularly grim in Nigeria and Kenya, where 77 per cent and 73 per cent of respondents, respectively, report a deterioration in the business environment, suggesting the impact of the acute challenges these countries may be facing, such as currency devaluation, economic pressures, and government policies which are profoundly affecting MSME operations.
Interest rates were less commonly identified as a primary concern but still significant for a notable segment, particularly in Kenya (37.18%), where it could reflect the higher cost of borrowing, affecting business expansion and operations.