Small enterprises bet big on regional integration

Monday June 19 2017

Gender and Youth Affairs secretary Sicily Kariuki with CAYE President Brian Randich at Commonwealth entrepreneurship conference on May 24. PHOTO | SALATON NJAU | NATION

Gender and Youth Affairs secretary Sicily Kariuki with CAYE President Brian Randich at Commonwealth entrepreneurship conference on May 24. PHOTO | SALATON NJAU | NATION 

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Enhancing integration of East African economies is one of the main ways to enable young entrepreneurs to scale up their enterprises.

This emerged during the Commonwealth Alliance of Young Entrepreneurs (CAYE) symposium held in Kenya recently.

Experts said strengthening the inter-trade ties among East African Community (EAC) economies will make it easier for budding entrepreneurs to start businesses and tap the wider regional market.

To achieve this goal, CAYE is lobbying for the formation of a secretariat charged with building relationships between related businesses across borders.

CAYE Kenya Chapter co-ordinator Eric Mungai said businesses in the region could enjoy higher returns if the proposed inter-regional secretariat links traders and markets through a portal.

The two-day workshop in Nairobi attracted participants from Seychelles, Mauritius, Tanzania, Rwanda, Kenya and Uganda.

Newly elected CAYE president Brian Randich has been tasked with promoting inter-regional trade by identifying products that young entrepreneurs can deal in.

Mr Randich said youth entrepreneurship holds the key to unlocking the latent potential of East African economies. “We need to nurture and entrench the culture of entrepreneurship if we are to permanently address the challenge of unemployment,” said Mr Randich.

“Young people understand one language and that is business. We want linkages across borders to promote business and play our role in speeding up development in the EAC countries.”

Mr Mungai hailed the EAC free visa rule, saying it has seen many traders travel across countries in search of new deals for their fresh produce and processed products. This, he said, could be enhanced further if the governments played a more robust role in promoting e-commerce.

“We want to build trust among young people that they can use the Internet to trade across borders. No one needs to travel anymore but the respective governments of Kenya, Uganda, Rwanda, Burundi, Tanzania and South Sudan must move fast to authenticate all businesses registered in their countries to facilitate business,” said Mr Mungai.

CAYE said it is in the process of establishing a regional trade reference bureau, which will promote genuine traders while identifying unscrupulous businesspeople who shortchange trade deals.

“We want all conducting cross-border trade to register with the soon-to-be-established bureau to help build an e-commerce platform for our region,” Mr Randich said.

Mr Mungai told Smart Company that Kenya needs to prepare a reliable small and medium-sized enterprise database showing exactly what goods and services every SME deals in to help traders from other countries access them.

Mr Randich said the capping of interest rates on bank loans has adversely affected SMEs. He encouraged young people need to be innovative in raising funds to scale up their businesses.

SMEs were hardest hit by capping of interest rates since banks consider many small enterprises as risky. The lenders shifted to the government Treasury bills and bonds, which are not prone to the volatility of the market.

Mr Randich said the notion that SMEs are risky has been overplayed, a move that is threatening to hurt Kenya’s ease of doing business.

Delay payment

“Think of an SME that took a loan to meet requirements of a tender by a county government or the national government. Once it delays paying, the SME’s name is forwarded to the Credit Reference Bureau for blacklisting,” he said.

“We are killing businesses and all we are asking is for the government to establish a business bank for SMEs.”

Many small enterprises, he added have resorted to seeking loans from shylocks who charge exorbitant fees.

“Woe unto you if you did business with a county government most of them take a long time before paying,” Mr Mungai said.

“We have companies whose payments have been delayed since devolution was introduced.”

The CAYE advises small enterprises to enter into business-to-business partnerships and consider equity deals that could help a business to scale up its operations.