Commentaries

High costs of operation deal SMEs a blow

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Published on Tuesday, 09 September 2008 05:47
High fuel prices are among operation costs forcing small and medium businesses to redesign their business.  Overall inflation, the general rise of prices of goods and services, touched 27.6 per cent in August, with fuel prices going up by 30.8 per cent between August 2008 and August last year.  

The rise in fuel prices has left business people to turn away from businesses once considered lucrative. With an eye on reaping from the construction boom in Kisii town, Magdalene Nyaboke had bought 10 Mitsubishi Fuso trucks and branched into the transportation of building and construction materials.

The transport company was to act as an associate of her wholesale and rental trade business, St Jude’s Wholesalers and Supermarkets. But as the price of diesel has steadily increased, hitting a high of Sh109 per litre in Kisii from Sh90, Ms Nyaboke has had to sell eight of her tracks leaving her with just two. “It turned out to be too expensive and we were running on loses so we had to trim our operations,” she says.