Banks in Kenya are aligning to offer financial literacy to Micro, Small and Medium Enterprises (MSMEs) to boost productivity and efficiency in the sector.
The informal sector in Kenya employs approximately 14.9 million Kenyans and contributes an estimated 28 per cent to the country’s Gross Domestic Product.
In partnership with the Kenya Bankers Association (KBA), the banks are training more than 100 entrepreneurs, each, in the MSME sector.
While it has been hard to get small loans in Kenya for MSMEs, most of those starting businesses rarely have startup business loans. It is even harder even for small business grants to come by forcing many business incubations to either take too long to grow or to die entirely.
Banks offering entrepreneurship training in Kenya
Knowhow on how to start a business is also limited since there is poor research by prospective entrepreneurs.
However, the National Bank of Kenya has been running training in a series of countrywide seminars through its National Bank Business Club.
Dubbed ‘Taking your business to the next horizon’, the business seminar addresses specific needs identified from customers.
National Bank Managing Director and CEO, Wilfred Musa say that the club is a platform for growth. MSMEs get business solutions, advisory services and support to grow with the bank.
The club also offers a channel for interacting, networking and providing experiential opportunities to SME customers.
Diamond Trust Bank (DTB) is also training entrepreneurs under a financial literacy programme supported by KBA.
The programme is meant to inculcate the necessary skills required to run their businesses effectively to enable them to take advantage of the financing opportunities offered by banks.
KBA facilitates the training under their Inuka Enterprise Programme, which has similar objectives for the MSME sector.
Diamond Trust Bank Group CEO Nasim Devji says the programme is an essential part of the bank’s business objectives.
“We hope that this training enables more micro and small entrepreneurs to organise their businesses in such a way that they can channel their skills more efficiently and position their ventures for growth,” said Devji during the launch.
She said that with most MSMEs being sole proprietorships, the training needs to be tailored to the MSMEs requirements as they are the drivers and most important decision-makers in their businesses across the country.
The training intends to build MSMEs capacity in financial and human resource management, strategic planning, marketing and communication to enable them to do business better and especially attract the kind of finances they need to grow.
The traders will also receive training on the various financial products and services available to enable them to grow their business.
The training is split into a seven-module curriculum which is delivered in three sessions in partnership with KBA.
KAM’s role in MSMEs Development
The Kenya Association of Manufacturers (KAM) advocates for the creation of a conducive environment for entrepreneurship and SME development by the government.
KAM seeks to provide strategic leadership in supporting manufacturing SMEs towards inclusive global competitiveness.
The mission is to foster the development of flourishing entrepreneurial culture and competitive small and medium manufacturers in Kenya and in the region.
In supporting MSMEs, KAM pushes for quality product development coupled with the right pricing to enhance competitiveness, exploiting economies of scale and increasing the marginal revenue for various proposed products.
While jobs in Kenya are hard to come by, the local level of product development is low. This results in high levels of production costs and limited market share. This results in the lack of competitive edge among the processors/ manufacturers.
While access to markets is not breaking news in Kenya on a regular basis, KAM says that various issues characterise both the domestic and international markets.
Locally where finished products are sold, the domestic market’s formal marketplace has a preference for high-quality products at reasonable prices. This segment is, however, too small to bring down the unit cost of production through economies of scale. The large segment is comprised of the informal market. Internationally, there is a disparate imbalance between exports and imports where the latter outweighs the former.
KAM also seeks to create avenues to access to affordable finance, improve raw materials supply and management, have quality standards & certification for locally made products, and improving access to technology.
Due to copyright infringement, KAM also pushes for product innovation and patenting, policy, regulatory and business environment while also improving technical expertise where
unavailability of specialised technical training contributes to low productivity.
Access to credit for small-to-midsize enterprises
In May 2019, Central Bank of Kenya (CBK) Governor Dr Patrick Njoroge launched a scheme targeting MSMEs to ‘improve’ access to credit for small-to-midsize enterprises.
Through the scheme managed by five banks, customers will access unsecured loans through a mobile phone application. The money, ranging from KShs30,000 up to KShs250,000, will then be credited to the customer’s wallet.
Commercial Bank of Africa Limited (CBA) which is owned by the Kenyatta family, the Cooperative Bank of Kenya Limited, Diamond Trust Bank Kenya Limited (DTB), KCB Bank (Kenya) Limited and NIC Group PLC which was recently acquired by the Kenyatta family are among those piloting the scheme.
Online business academy for SMES in Kenya
In September last year, Invest in Africa (IIA-Kenya) partnered with the African Management Initiative (AMI) to launch an online learning academy for SMEs.
Beneficiary SMEs are those on the African Partner Pool (APP) and the academy is to help them gain expertise to scale and grow their businesses.
SMEs will access a library of courses, practical tools and social features during the one year programme.
They will also be guided through key steps of developing their businesses, understanding market demand, their customers, cost-effective product and developing, testing and refining their business model and how to get funding for the business.