Factors Affecting Small Businesses Recovery Postdisaster: a Case Study of Fires in Gikomba Market

Abstract

The informal sector contributes significantly to development in developing countries. However, businesses in the sector continue to face considerable challenges threatening their survival and recovery from shocks. Notwithstanding, these businesses have displayed remarkable resilience by rebuilding their structures and resuming operations. Little is known about the factors that impact the recovery of small businesses after they experience shocks. The paper aims to determine the characteristics of small businesses that recover after exposure to external shocks. The study’s objectives were to identify the level of recovery of small businesses in Gikomba market; to identify the characteristics of recovered businesses; and to understand how small businesses recover after experiencing a shock. The study used a mixedmethod approach to allow for measurement and generalization as well as, delve deeper to understand why some small businesses can recover as opposed to others. The results show that there was a relationship between business recovery and the experience of the business owner, the business age, the diversification of family income, an individual's hardiness and resourcefulness. Findings also show that financial resources obtained from friends and family are instrumental in business recovery. This study concludes that a majority of the small businesses in Gikomba market were able to recover owing to their resilience and that resourcefulness and hardiness are the most important attributes that can be used to measure individual resilience. The study recommends that when studying resilience, emphasis should be on the hardiness and resourcefulness of individuals. The research also makes policy recommendations that the government should incentivize financial institutions to promote lending to small businesses and also incentivize insurance firms to design products that are accessible to small informal businesses as they are most susceptible to external shocks.