2000 SMES to benefit from financial literacy empowerment
By Esther Mwangi/Okello Tracy
Nakuru County Government has rolled out a financial literacy programme targeting at least 2000 Small and Medium enterprises (SMEs) to help them expand their business enterprises.
Trade, Culture, and Tourism County Executive Committee Member (CECM) Stephen Kuria said the initiative intends to build small and medium enterprises’ knowledge in financial systems, human resource management, strategic planning, marketing and communication to enable them do business better and attract the finances they need to expand their ventures.
According to Kuria, the programme which is being undertaken in partnership with Strathmore business school, was specifically tailored towards enhancing their financial literacy by helping in inculcating necessary skills required to run businesses effectively in line with taking advantage of the financial opportunities offered by both banks and the government.
He added that through the partnership, the County Government and Strathmore University will leverage each other’s expertise to create a supportive fulcrum specifically designed to propel SMEs to the next frontier of growth and economic expansion.
While noting that SMEs were the driving force of economic developmentt, Kuria revealed that SMEs account for 90 per cent of all businesses and offer 50 per cent of employment opportunities leading the sub sector contributing 40 per cent of the Gross Domestic Product (GDP) in the County.
The CECM spoke at the County headquarters in Nakuru when he hosted a delegation from Kiambu County’s Trade, Culture, and Tourism department.
Through the help of the programme, the chief officer said business owners will be able to understand and effectively use financial skills such as personal financial management, budgeting, and entrepreneurship skills to scale up their firms and urged the traders to join cooperatives as this will boost their bargaining power when sourcing for markets and applying for credit facilities from financial institutions.
The CECM noted that though most SMEs had been adversely affected by Covid-19 economic aftershocks, affordable financing remained a challenge due to high interest rates.
He urged other financial institutions to realign their programmes by assisting traders adapt to the new reality caused by COVID-19 pandemic.
He cited lack of sufficient collateral assets, high cost of credit, and informal business structure as bottle-necks that had rendered most SMEs ineligible for financing, a situation Kuria said had been worsened by the Covid-19 pandemic.
“With reduced turnover and Covid-19 disruptions in the market and supply chains many Small and Medium Enterprises are unlikely to attract affordable and quality credit under the traditional arrangements,” Kuria added
Kuria said there was a growing need for entrepreneurs to join the digital market to expose Kenyan goods to the global market and called on the dominant small and micro enterprise sector in the country to exploit the increased online purchases for growth, adding that the County was willing to commit resources to support the initiative including training of vendors to give them the tools to sell their merchandize online effectively.
The Central Bank of Kenya last year reported that at least 35 per cent of micro-enterprises were wiped out by the Covid-19 pandemic by July 2021, revealing the vulnerability of businesses which constitutes over 90 per cent of Kenya’s economy.
Several initiatives have recently been launched to support SMEs including a State-backed credit guarantee scheme through which more than Sh4billion has been disbursed by banks to support small businesses.
A recent release by the National Treasury said by August 2022, a total of 2,609 small businesses had taken loans amounting to Sh4.12 billion in a spun of one year after it had been launched.
The credit guarantee scheme encourages banks to disburse credit to borrowers they would otherwise turn away, confident that they will be compensated in case of defaults.
A 2018 Kenya National Bureau of Statistics (KNBS) report shows approximately 400,000 SMEs do not celebrate their second birthday and very few of them reach their fifth birthday. More than half, 46 per cent of Kenya’s SMEs reportedly close within a year of founding, the report read in parts.
A recent Annual Performance Report for MSMEs for the 2021/2022 Financial Year by the National Treasury indicates that the majority of newly established Micro, Small and Medium Enterprises in the country do not survive the fourth birthday.
It notes that the businesses, despite the critical roles they play in the economy, continue to face a myriad of challenges including constrained access to finance, market challenges and weak business strategies.