Kenyan SMEs struggle to stay afloat amid COVID shocks

Kenya has been at the forefront of implementing various interventions to safeguard, support, and uplift small and medium enterprises (SMEs) over the past year. While some initiatives have shown promise, others seem to have missed the mark. Victor Otieno, a SME Consultant from Viffa Consult, sheds light on the landscape of SME interventions in Kenya. One of the significant interventions was the Red Cup repeal, aimed at improving access to finance for SMEs. The launch of Stawi, a mobile credit application supported by commercial banks, also aimed to revolutionize credit availability for SMEs. Additionally, plans to establish warehouses in East African nations were devised to facilitate market access for Kenyan SMEs, in response to stiff competition from neighboring countries like Tanzania and the United Arab Emirates. The year 2020 saw a surge in interventions focused on the stimulus packages offered by the government. Otieno highlights the credit guarantee scheme as a potential game-changer in SME financing, especially if it includes various stakeholders like private equity funds and angel investors. This inclusivity could pave the way for more effective financial support for SMEs. Amidst the ongoing COVID-19 pandemic, efforts have been made to mitigate the impact on SMEs. Otieno stresses the uniqueness of the credit guarantee scheme and its potential to make a substantial difference in SME financing. While initiatives like the pending bills and competition amendment bill are not groundbreaking, the guarantee scheme stands out for its innovative approach. The role of SMEs in engaging with these opportunities is crucial for the success of interventions. However, Otieno highlights the challenges faced by many entrepreneurs, particularly in access to information and digital platforms. With a large percentage of SMEs operating informally, bridging the information gap becomes essential for their growth. While efforts have been made to disseminate information through online channels and mainstream media, the importance of reaching entrepreneurs through radio broadcasts, especially vernacular stations, cannot be understated. The success of interventions hinges on the active engagement of entrepreneurs, many of whom face hurdles in accessing digital platforms due to limited education levels and internet infrastructure. Looking ahead, Otieno emphasizes the need for tailored solutions crafted specifically for the challenges faced by SMEs. Localized approaches to issues like access to finance and markets within the East African and continental landscape could yield sustainable solutions for SME growth. Integrating the African Continental Free Trade Agreement could further enhance market opportunities for SMEs, fostering long-term prosperity for entrepreneurs across the region.