Small business the engine of our economy

Imagine, for a moment, that the Kenyan economy is stuck in a box.

Trapped inside, it cannot reach its full potential. Yet next to the box is a golden key.

This key can open the lock and release the economy, allowing it to grow and flourish.

In Kenya, small and medium-sized enterprises (SMEs) are that key.

Across Kenya, SMEs support our economic growth, whether through agriculture like the pineapple farmers of Thika, horticulture as in the rose farmers of Naivasha, tea production in the fields of Limuru, or fishing by the communities of Kisumu.

SMEs currently contribute more than half of Kenya’s gross domestic product and provide more than three-quarters of all new jobs.

The importance of SMEs is well documented.

Dalberg, a New York strategy and policy advisory firm that specialises in global development, found that “SMEs are a fundamental part of the economic fabric in developing countries, and they play a crucial role in furthering growth, innovation and prosperity”.

This sense of innovation is crucial, not only because SMEs must innovate to grow, but also because successful SMEs mean the ultimate success of the country.

CHANGING COURSE

A report by the UK’s Organisation for Economic Cooperation and Development shows that when governments create a climate where SME innovation can flourish, a more “dynamic economy [with] greater employment opportunities” is created.

In general, SMEs are perfectly placed to innovate — they are small and agile, with the ability to adapt quickly when things are not working.

Kenya has a great spirit of innovation at its core, yet access to modern technology, training and finance are vital to allow any SME to thrive, yet the organisations lack access to these.

One way of supporting SMEs is through engaging and encouraging young innovators in our country. Another is through virtual accounts.

Banks are now moving towards more online banking offerings.

This means that SME owners do not need to go to a branch and can save valuable time and money by banking online from their smartphones or computers.

ADDRESS NEEDS

These initiatives are important, but we cannot stop there.

Yes, we need to help young business in the innovation space to thrive.

We also need to develop fintech solutions that help SMEs.

But perhaps most importantly, in order to unlock Kenya’s full potential through SMEs, we need to ensure that entrepreneurs from all regions and sections of society, including those from marginalised groups, are enabled.

Currently, women lead 48 per cent of Kenya’s SMEs, yet access to credit, lack of training, and network connections are cited as key constraints to getting their businesses and innovations off the ground.

And there are further barriers to market entry and growth for women: for instance, our laws require women SME owners applying for finance to get spousal consent first. Clearly, we should be looking for solutions.

Looking at the sector more broadly, SMEs require more support to gain the skills and information necessary to manage their business better.

We are seeing a hunger for training opportunities and a real desire to harness opportunities for growth.

Now is the time to address these needs and in doing so, unlock the key to our country’s future.

The writer is the head of SME banking at Barclays Bank of Kenya. [email protected].