Covid-19 financial distancing for MSMEs in Kenya

Abstract

The Micro Small and Medium Enterprises (MSMEs) are important for every nation’s economic development. They provide employment and spur the growth of multiple sectors in the economy.  The Covid-19 pandemic has negatively affected MSMEs' performance. The study seeks to demonstrate why COVID 19 may lead to the terminal quarantining of MSMEs. The study is anchored on decision usefulness and information asymmetry theories. The study adopted a descriptive research methodology and sampled MSMEs within Nairobi City County. The study used SPSS to analyze data in addition to Microsoft excel. The study found that over 70% of MSMEs had their sales decline by over 65% while 95% of them had their sales decline by over 30%. The study found that about 68% of MSMEs lacked financial management skills. The study recommends that with legal and institutional reforms, the government needs to develop a financing framework for MSMEs.