Why businesses are struggling in Nakuru

The other day, a Nakuru based entrepreneur in hospitality sector was lamenting on a social media platform how business wasn't picking up despite investing massively on it, with a bank loan in tune of a million and accrued interest yet to be paid, and contemplated ending her life. Kenyans, in their uncharacteristic true self, rallied online and organically met at her facility in name of supporting the business and giving her the needed moral support, with reports some travelled all the way from Nairobi just to have a plate of food.

  Hers is not an isolated example as businesses are struggling with notices of vacant spaces for rent plastered on doors where once thriving businesses used to operate at, but have since closed shop. Here's the reason why businesses are struggling or closing shop.

No money in circulation

There's little money circulating in the economy that many Kenyans don't have any disposable income to spend. It has nothing to do with holiday festivities or the January blues where the back to school fee obligations leaves many financially drained. This has been observing for around three years such that some business owners are heard to be saying the current situation is worse that Covid-19 pandemic period where lockdowns observed but businesses still managed to stay afloat without government bailouts or other external incentives. When the current administration came into power, it prioritized domestic borrowing and crowded out the private sector, such that financial institutions saw it lucrative lending to the government and reaping handsomely in interests. Governments rarely fails on debt obligations and this could inform why banks aren't in business with private sector. More, central and county governments haven't paid suppliers and other institutions pending bills thus limiting their scope of operations leading to job losses or scaled down operations and businesses struggling to survive. Don't rule out the 2027 politics will observe, where the suppliers and institutions are likely to be paid pending bills between this year and next as a campaign tactic which will see the economy awash with cash and the Central Bank mopping up the liquidity once the elections are over.

Policies of the day

Counties have adopted ways of raising own source revenues and one way is strangulating businesses with a host of operating licences. You can see a business, even a single unit one, having to apply at least seven licenses which doesn't make sense. Add too the Kenya Revenue Authority had come with own ways of putting even Mama Mboga and boda boda riders into its tax portal as a way of broadening tax collection, and especially the electronic tax invoicing. Businesses are feeling the heat, including being slapped with tax penalties. With nil returns on freeze as KRA is converting nil taxpayers into active taxpayers before June this year (2026), its going to hit hard everywhere. Add the increased NSSF contributions and salaried employees will be looking at further mutilated payslips. There's no ruling out if more taxation measures are on pipeline as had become the norm with each financial year. Such squeezes on workers payslips and other policies are seeing the ease of doing business becoming hard.

Growth of urban environs 

If you were to take a walk in major Nakuru streets shortly after sunset, you'll be shocked to see shuttered businesses as many closes as early as 7p.m. Insecurity is rampant, with street gangs ruling in their own demarcated turfs. You can't trust boda boda operators especially early in mornings and late in evenings, if they aren't known faces to you. Facilities like social joints too do not record throngs of revellers like in the past. But if you move away from urban places to estates, you begin to realize why estates are beating town based businesses. In well established estates, banks have physical branches, supermarkets are there, classic eateries, clubs with ample parking and round clock security, and basically everything. High spenders socializing night life are rarely seen in urban clubs where females have saturated and drink spiking is common, but prefers such out of town places that are quiet and peaceful. With the rich moving out of urban places for the quietness of rural areas, with them goes that disposable income that is spend in the environs of their new addresses, and thus shifting their customer loyalty elsewhere.

Duplications

Still in Nakuru, there's a clothing business that trades as Wa Jose Smart Wear. Across the street is a similar one by name of Wa Morgan. They don't belong to same person but are competing ones. Its not unusual to see copycats tailoring their models on success of a thriving business, including attempting to "inherit" customers of a rival should one find it tough and call it quits and relocate business to a new address. No wonder in one street counting at least four supermarkets have only a single one with once floor spaces occupied by supermarkets subdivided into different business stalls. Competition is good as no one has a monopoly in a given market segment, but sometimes unhealthy one can be costly if the aim is to push off a business or claw its customer base by offering mirror goods and services as that competition, without thinking of diversifying with auxiliary goods or services to have a competitive niche in same market oriented.