The global pandemic of COVID-19 has challenged the status quo of how entrepreneurs run their businesses and any futuristic plans to scale their activities has been put on ice. With our E4Impact Accelerator in Nairobi (Kenya) we are supporting our enterprises during this trying time who for sure are facing some challenges caused by the pandemic but at the same time they are not sitting still and are responding to cushion themselves from its adverse effects. With their response, we can now see the emergence of some best practices that could be emulated by other startups in Africa.
Some of the challenges our entrepreneurs are they are facing currently are:
- Delayed fundraising. With the pandemic, investors view this period as “high-risk” time to invest. Some of them, decided to interrupt negotiations even though the investment process was close to a positive ending.
- Reduced employee productivity – With most employees not being able to go to work, working online is now the new norm. But for enterprises operating in rural areas or remote areas with limited internet connectivity, their productivity is greatly diminished.
- Increase in cost of production – The demand for more hygiene standards at this moment to curb the spread of COVID19 comes with a high costs for entrepreneurs. Think of heighted requirement for proper packaging, sanitizing of work spaces and protection of workers all increase the cost of the final product.
- Import/export of goods and services – Some of companies who utilize imported products as raw materials for their production or several of them sell their products abroad are experiencing challenges due to reduced and infrequent cargo freights. This is some way gives an opportunity situation will persist for sometimes unless the local companies begin to utilize some locally produced raw materials
From a macroeconomics prospective, Kenyan government is trying to support both enterprises and citizens. Two weeks ago, Kenya’s President Uhuru Kenyatta approved the Loon Project by Google and Telkom Kenya to provide internet to Kenyans countrywide as they work from home during the Coronavirus outbreak. The government also approved a fiscal policy aimed at reducing taxes: VAT has been reduced from 16% to 14%, and workers with a monthly salary of less than 240 euro are exempt from paying taxes. Moreover, it launched a Cash Transfer Programme for the elderly and vulnerable citizens.
(Google’s Parent Firm Partners with Telkom Kenya to set up balloons in the sky to offer internet in rural areas. Image from: Kenyanwallstreet.com)
There is light at the end of tunnel. Some of the local enterprises and E4Impact accelerated enterprises, are using this crisis as an opportunity to adapt their value offerings and generate more revenues to sustain themselves, their employees and continue offering their products to their clients.
- Some hospitals like M.P. Shah launched a telemedicine platform, thereby ensuring virtual Medical consultations between patients and their doctors;
- Increase of distribution channels – Now more than ever, our enterprises are leveraging on e-commerce platforms such as Sky Garden and Greenspoon to create value for their customer and deliver goods right at their doorstep. This strategy has led into new deals with delivery services providers such as Mizizi for deliver products directly at clients homes;
- Digital marketing and communication – Our enterprises are increasing their investment on brand awareness. BDELO a tortillas producer who are one of the accelerated companies, has developed a partnership with a chef program on TV showing how to use their products. The session runs once a week.
(Eden Leather new range of products of 3-PLY masks to serve new customer segment.) - Building and strengthening partnerships – Accelerated companies such as H&H who produce Granola and Muesli, Samwa Natural Foods who produce and sell dried fruit and jam and BDELO have been able to strengthen the relationships with Kenya’s leading retail supermarkets to promptly deliver and sell their products leading to tripling of their sales within this period. This has also to increased brand awareness of their products. This could be a cue for others to think and consider on how they can add m
ore distribution channels and build more on B2B relationships with the retail chains as a way to face the pandemic. - Product adaptation to serve a new customer segment there is need for product adaptation, for instance the accelerated companies such as Eden leather, LULEA and Jeilo collections who in fashion industry and accessories have converted their production into manufacturing essential goods like facial masks.
(E4Impact East Africa Manager)