Research: poverty rate doubles as coronavirus grips Kenya

06 Jul 2020

Smallholder farmers in Embu County, Kenya. Although agriculture is outperforming other sectors, market closures and transportation bans have left millions of farmers scrambling to sell their produce.

When Kenya recorded its first case of coronavirus on 12 March, the government wasted no time in acting: within 72 hours strict lockdown measures were in effect, and inter-county travel bans, the closure of open-air markets and a countrywide 9pm to 4am curfew soon followed.

Now, original new research from Hand in Hand is providing perhaps the most detailed look yet at how the smallholder farmers and microenterprise owners that power Kenya’s informal economy, in particular women, are struggling to cope.

The findings, which come as the government of Kenya yesterday extended its curfew by 30 days even while loosening some travel restrictions, paint a bleak picture of shuttered businesses, dwindling savings, and a country that is running out of time.

But they also sketch a roadmap to recovery, capturing the areas where our members – and the 11.8 million Kenyans who work in the country’s informal economy – most need support.

The results

In late-May, Hand in Hand staff surveyed 579 Self-Help Group members and 197 borrowers from our Enterprise Incubation Fund, almost 80 percent of them women, to find out they’d been affected by the lockdown. Respondents were randomly selected from 21 branches spread out across the central and southern portions of the country.

How were their businesses coping? Their savings and debt levels? What steps were they taking to adapt? What assistance did they need, financial and otherwise?

Here’s what they said.

 

83% living in poverty

Poverty

Before coronavirus forced Kenya into lockdown, 44 percent of sampled members lived below the poverty line of US $1.90 per person per day (Countrywide, the poverty rate is 36 percent.) Eight weeks into lockdown, that number had almost doubled, reaching 83 percent. 

 

25% of businesses closed

Business closures

A full quarter of respondents’ had been forced to close their businesses. In some areas, that figure was as high as 40 percent. Transport and manufacturing were the hardest-hit sectors, with just 55 percent and 67 percent of Kenyan microenterprise owners still managing respectively. Agriculture, where 78 percent respondents of still had work, and retail, where 75 percent did, were faring best.

 

67% drop in income

Business income

Even when businesses managed to stay open, the picture was bleak: regardless of sector, location or gender, the average drop in business income was 67 percent. Not surprisingly, then, respondents identified low business incomes, a lack of customers due to market closures, and low demand as their most pressing challenges. Rising prices for farm inputs and a lack of affordable transport were other common themes.

 

69% drop in savings

Savings

Before the lockdown, 5 percent of respondents had no savings. Eight weeks later, that figure had shot to 39 percent. Just over half of all respondents, 54 percent, said they’d spent at least some of their savings on household needs including food. An almost equal number, 52 percent, had put at least some towards keeping their businesses running. Five percent were using their savings to pay off loans.

For almost all of them, time was running out. Five weeks ago when the survey was conducted, only 14 percent had a rainy day fund that would last more than a month.

 

54% plan to take out a loan to restart their business

Financing

Forty-two percent of members had no outstanding loans. Among the 58 percent who did, Self-Help Group savings funds and Hand in Hand’s Enterprise Incubation Fund were the two most common sources of credit. Both groups said financing to restart their businesses was their most important requirement, citing an average loan size of KES 27,200 (US $260). Zero-collateral loans, grants and even food donations were requested with no prompting.

Other ways we can help

Financing was our members’ number one requirement – but it wasn’t their only one. Eighty-four percent said they need personal protective equipment including face masks, gloves and soap to reopen. Farm inputs such as new seeds, training to help businesses survive during lockdown, and help accessing markets were also requested.

And then there were members who needed no help at all. Nine percent of respondents said they’d made strategic adaptations to their businesses, ranging from sourcing inputs locally to circumvent transport restrictions to more directly marketing their products door-to-door. In one case, a woman in Nairobi said she was working to make her handmade goods available on an e-commerce platform.

To learn more about this report and how Hand in Hand is adapting our programmes to help our members recover, please contact Hand in Hand International Head of Programmes Amalia Johnsson.