The number of companies under liquidation rose to 15 in the first four months of the current financial year, up from nine the previous year, resulting in more job losses in period when employers across many sectors shed staff to try and stay afloat in a tough economic environment.
Liquidation is the process of winding down a company, selling off its assets, and settling its creditors and shareholders before ceasing operations. Companies liquidate when they cannot meet their obligations as they come due, leading to bankruptcy.
In the four months to October, three companies went into voluntary liquidation, while 12 others were petitioned by their creditors through the courts to liquidate, according to the latest data from the Office of the Official Receiver at the Business Registration Services (BRS).
This is a 66 percent rise from the nine liquidations recorded in the same period last year, pointing to a more difficult business environment and dealing a blow to workers who will now be left jobless.
This comes on the back of a series of layoffs and a freeze on new hires by companies seeking to cut operational costs amid rising taxes and expenses, may compound the problem of unemployment in the country.
Some notable companies that went under liquidation over that period include automaker Mobius, which announced its liquidation in August amid mounting debts and a multi-million-shilling tax dispute with the Kenya Revenue Authority.
Another is e-commerce firm Copia, which went into liquidation in July, after the voluntary administration it went into last failed to return it to buoyancy, laying off all of its remaining 1,500 employees in Kenya and across other markets.
In addition to the companies under liquidation, 10 applied for bankruptcy between July and October, while six went into voluntary administration, a process meant to try and salvage struggling firms before resorting to liquidation.
BRS data also shows that over the same period, some 174 companies were dissolved, with many citing scrutinies by the Kenya Revenue Authority as the main reason for choosing to close their businesses.
Besides, liquidations several firms have also cut jobs or slowed hiring to stay afloat in a tough economy. For example, a new Central Bank of Kenya (CBK) survey shows that nearly a third (31.3 percent) of manufacturers cut full-time jobs in the three months to November 2024 even as half of them posted reduced sales in an environment of poor demand for goods and elevated cost of operations.
The CBK study conducted among private sector chief executive officers shows shedding of full-time jobs came in the period in which 56.3 percent of manufacturers reacted to reduced sales by cutting production volumes and therefore fewer employees.
The review period saw only 6.3 percent of manufacturers step up hiring while 62.5 percent kept jobs unchanged. Previous CBK surveys have been pointing to weakened demand across sectors, with manufacturing singled out as the most hit.
CBK noted in the latest survey that more respondents in the manufacturing sector recorded subdued business activity.
