By GEOFFREY IRUNG
In Summary
- Business people in Kenya cite lack of access to credit as big hurdle.
Lack of access to credit is the single biggest
challenge for small and medium-sized Kenyan businesses, a global survey
has shown.
The survey of 26,000 firms across the world
commissioned by multinational workspace provider Regus shows that 86 per
cent of East African firms reported difficulties accessing credit,
compared to a global average of 76 per cent. In North Africa, the
challenge of credit was cited at 69 per cent.
About 459 East African businesses responded to the survey, said Regus in a statement.
“The latest Regus research, canvassing over 26,000
business managers and owners in 90 countries, confirms that nimble and
flexible Kenyan and East African entrepreneurs regard lack of access to
credit (86 per cent) as the biggest deterrent to setting up a business
today,” said part of the statement.
Kenyan research analysts have often noted that
even when the economy is weak, commercial banks’ profits remain
un-affected since the lenders concentrate on lending to the government
and big businesses that have predictable cash flows.
“Defying weak economic performance — which saw
credit to the private sector drop to an all-time low of 7.1 per cent (as
in Oct 2012) — and a hotly contested election, our Kenya bank index
has appreciated 68.5 per cent (last 12 months to May 31), outperforming
the MSCI Emerging Markets Bank Index and the NSE 20-share Index, which
returned 21.3 per cent and 33 per cent, respectively,” said a Standard
Investment Bank report on the banking sector released this week.
Of the 459 firms surveyed in East Africa, 70 per
cent also identified red tape as a big challenge compared to 74 per cent
globally, 45 per cent in North Africa and 69 per cent in the Middle
East.
Lack of government support was identified as a
challenge in East Africa by 57 per cent of the respondents compared to a
slightly higher level of 61 per cent globally.
In Kenya, a Micro and Small Enterprises (MSEs) Act was enacted last year to support and protect small businesses.
The Act creates a special agency to facilitate and
develop small businesses with an annual turnover of below Sh500,000,
estimated to account for 18 per cent of the country’s GDP.
Other hindrances cited include domination of the
market by large corporations and current economic conditions as a result
of recession in many parts of Europe and less-than-favourable economic
climate in North America and Japan.
In the same survey, businesspeople in East Africa
were found to be more resilient compared to most others around the globe
with 92 per cent saying they would be ready to restart a business that
has collapsed. The global average
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