Financing SMEs will address lack of jobs, Kenya told

A past conference on SMEs. FILE PHOTO | NMG 

By JAMES KARIUKI

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Summary

• The event hosted by Invest In Africa(IIA-Kenya) and attended by 50 SMEs at the Strathmore Business School (SBS) heard that SMEs do not access funds mainly because they do not qualify as they hardly understand what banks look for in giving out loans.
• Besides, most SMEs lack credible data that banks need to assess their creditworthiness, leaving them out of the credit market.
• These are some of the hurdles that Kenya has been asked to address to enable SMEs obtain credit for expansion in order to generate jobs.
• Stanbic Bank’s Enterprise Banking Head Jeff Alondo said a considerable number of SMEs hardly keep records or have a business plan that can be used to assess their creditworthiness.

Kenya must find a quick and lasting solution to the financing of SMEs if the country is to deal with the challenge of mass unemployment among the youth, a Small and Medium Enterprises (SME) forum was told.

The event hosted by Invest In Africa(IIA-Kenya) and attended by 50 SMEs at the Strathmore Business School (SBS) heard that SMEs do not access funds mainly because they do not qualify as they hardly understand what banks look for in giving out loans.

Besides, most SMEs lack credible data that banks need to assess their creditworthiness, leaving them out of the credit market.

These are some of the hurdles that Kenya has been asked to address to enable SMEs obtain credit for expansion in order to generate jobs. Stanbic Bank’s Enterprise Banking Head Jeff Alondo said a considerable number of SMEs hardly keep records or have a business plan that can be used to assess their creditworthiness.

“About 90 per cent of SMEs in Kenya have access to finance from various sources but do not keep records nor have business plans.  Many SMEs do not take a long-term view of their businesses and it is time every SME owner aimed at building a company that will outlive them,” he said.

IIA- Kenya country manager Wangechi Muriuki (left) said Kenya cannot afford to ignore SMEs as they employ 90 per cent of Kenyans while contributing up to 25 per cent to the country’s Gross Domestic Product (GDP).

“Despite the growing number of targeted efforts for financing SMEs, the lack of  access to finance continually emerges as a critical factor affecting the growth and scaling up of SMEs in Kenya. It remains one of the most debated topics on matters SME,” she added.

Equity Bank’s director of SME Banking Philip Sigwart said banks take tough measures to protect customer deposits from risk-averse SMEs adding that Equity Bank loaned out Sh4 and Sh5 billion to SMEs monthly.

SBS’ faculty member and consultant Prof Geoffrey Injeni said SMEs need to undergo training on how to make their businesses investor-ready.

IIA-Kenya’s goal is to increase SMEs’ access to skills, markets and finance to drive job creation and enterprise development. It has created an online technology platform — The African Partner Pool (APP) — that contains cross-sector database for 1,300 vetted SMEs from Kenya. 

The platform directly connects SMEs with larger organisations that source for goods and services from Kenya.