Use job loss numbers for candid enterprise review

Market disruption and job losses are largely to blame for the current hard times. PHOTO | SHUTTERSTOCK

By BUSINESS DAILY
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Nairobi Securities Exchange-listed companies sent home 7,000 workers in 2019, a 143.39 percent rise compared to the previous 2,876 due to declining profitability and revenues.

In 2017, the figure was a modest 1,870, showing the outlook is getting bleaker and is likely to be worse under the Covid-19 pandemic.

The Central Bank (CBK) says the obtaining situation threatens Kenya’s financial stability when the laid-off workers and the companies themselves can’t service their loans.

Last year, 17 companies issued profit warnings, a rise from 11 in 2016.

Earnings per share figures have dropped from 7.2 in 2018 to 2.1 percent.

This, therefore, leaves the economy with a plethora of unanswered questions on the stability of the enterprise scene at a time the crucial World Bank’s Cost of Doing Business index shows Kenya was doing better with a ranking of 56 against 190 economies, having risen by five places.

Since the Index was released, both start-ups and established businesses, some listed, have not only registered reduced profits and revenues, but have reported losses.

Kenya Power, for example, made a Sh2.98 billion loss in the year to June, the first time in 17 years. But it is not alone.

With these grim figures, companies have resorted to reducing weight by offloading workers, in some cases without redundancies, leading to growth-hurting burnout.

At such a time, the government ought to review some of the fundamentals like taxation, access to credit, cost of energy, and the emerging threat of pending bills where government agencies and departments owe enterprises more than Sh340 billion.

Pending bills is one of the thorny issues that lead to poor revenues and falling profits.

We urge the government to review what is causing this decline and come up with stimulus beyond Covid-19.

But having said that, we challenge all companies to tweak the selection of boards of directors, managers and all employees for best leadership and execution.

Even with all the right macroeconomic policies, no company can run on autopilot, especially at a time of cut-throat competition requiring rare innovations and leadership.