ECONOMIC DISRUPTION RESULTING FROM COVID-19 PANDEMIC AND THE IMPLICATION ON THE FINANCIAL PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN THIKA SUB-COUNTY IN KENYA

Abstract

Covid-19 pandemic affected most businesses globally and metamorphosed from a health concern into an economic crisis of unquantifiable proportions. The pandemic specifically affected SMEs in a significant way. There was disruption of trade across the globe due to travel restrictions resulting in businesses not accessing the raw materials for their manufacturing activities as well as not accessing the markets for finished products. Some businesses especially in the hospitality industry had to shut down following the dwindling number of tourists arriving in the country as a result of travel restrictions by various countries. This study determined the implication of disruptions brought by the pandemic on financial performances of SMEs. The study was anchored on Stakeholders Theory, Just in Time (JIT), Theory of Disruptive Technologies and The Exogenous Growth Theory. The study employed cross sectional descriptive research design. The research reached out to one hundred and twenty-two businesses, as the target population, which were fully licensed by the County government of Kiambu and have been in operations for the year 2019 to 2021. The researcher used a questionnaire to gather primary data which was administered to respondents through the drop and pick up technique. Data was analyzed using multiple regression. The study found that government Covid-19 regulations, supply chain disruptions and technological disruptions had a significant effect on financial performance of SMEs. The study recommended that there was need by the government to review some of the policies to create an enabling environment where businesses could thrive. Beyond government intervention, private companies could partner with technology companies instead of developing in-house technologies. Governments could further complement these interventions by investing in a set of enabling digital pillars. In the post–COVID-19 era, development finance institutions can further support the scaling up of technology companies in emerging markets by intervening more upstream. Key Words: Business Disruption , Covid-19 Pandemic, Economic Disruption, Pandemic CITATION : Njubi, G. N., & Abdul, F. (2023). Economic disruption resulting from covid-19 pandemic and the implication on the financial performance of small and medium enterprises in Thika Sub-County in Kenya. The Strategic Journal of Business & Change Management, 10 (4), 459 – 475. http://dx.doi.org/10.61426/sjbcm.v10i4.2765.