Financial Sector Deepening (FSD) Kenya and the Financial Access Initiative (FAI) research center of New York University, published the results of the Kenya Small Firm Diaries (SFD) study in Nairobi on Tuesday 23rd May 2023.
The Small Firm Diaries is a global research project being conducted between 2021 to 2023 in seven countries: Kenya, Nigeria, Uganda, Ethiopia, Indonesia, Fiji and Colombia. The study aims to improve the understanding of how small businesses can overcome the barriers they face in order to prosper in the modern economy, and thus contribute to reducing poverty.
In each country, a team of field researchers visited a sample of small business owners in low-income neighborhoods weekly for one year to collect quantitative and qualitative data on their financial flows. This information shed light on the economic decision-making, strategies, and constraints of small businesses as they navigate uncertain situations.
Financial Sector Deepening (FSD) Kenya and the Financial Access Initiative (FAI) research center of New York University anticipate that these results will inform the design of future development policies, financial services and tools to help small businesses and their employees to prosper.
The study was funded by the Argidius Foundation, the Aspen Network of Development Entrepreneurs (ANDE), the Bill & Melinda Gates Foundation, Financial Sector Deepening Kenya, and the Mastercard Center for Inclusive Growth.
In Kenya, the research was carried out in Kisumu, Kwale and Nairobi counties between October 2021 and October 2022.
The study found that although the Kenya sample has the largest group of firms that have been open for 7 years or more compared to other countries, it is in the middle of the pack in terms of monthly revenue, with 75% of the firms making less than KShs 240,000. This level of revenue affects the quality of life for employees, with approximately two thirds of staff interviewed reporting struggling to have enough money to obtain necessary items for their families.
In general, the study concluded that stability and growth is a priority for the entrepreneurs interviewed. According to the research, these companies face high volatility in their income and expenses. They cited “rising costs and supply problems” as the main barrier to achieving their vision of growth and stability.
More details about the Kenya Small Firm Diaries study, are in the publications and videos below. For more information about the global Small Firm Diaries study, visit the small firm diaries website.
1. Meet the Firms: Sardine Processors in Vanga, Kwale County
But the study finds that small firms face challenges that impede their ability to grow and reduce their value in the economy. Their employees, for instance, face precarious conditions. Employed mainly on casual and piecemeal terms, many do not get work for the full year and two thirds claimed their families had gone hungry at some point over the past year.
2. Video recording of the launch event