SME sector beats corporate Kenya in job security outlook

The Synovate survey also revealed that confidence level among business leaders in the medium sized firms stood at 51 points out of a total score of 100 points compared to large firms who returned a level of 47 points. Only firms with an annual turnover of between Sh70 million and Sh1 billion fall in the SMEs category.

Business leaders in small and medium-sized firms say their confidence in the economy is grounded in key changes in their operating environment, citing as recent improvement in infrastructure that has come with the landing of the fibre optic cable in Mombasa and the promise of faster and cheaper internet connectivity.

“It is likely that we will be adding more staff in the next year because more and more of our clients and prospective clients are looking to use the Internet as a core marketing and service delivery channel,” said Mr Moses Kemibaro, the business development director at Dotsavvy — an internet solutions firm.

In the manufacturing sector, which has had a barrage of problems, the medium sized firms hope to make full use of the slowdown period to reorganize their sales strategies to better manage movement of stock when strong growth resumes.

“The sales have dropped in the first six months of this year compared to last year but this is the time for us to search for opportunities of improvement and to move in a different direction,” said Dipak Shah, a director at Uzuri Manufacturers -- makers of cosmetics, garments and plastics.

Mr Shah says the company has recently employed two new management staff to enhance the efficiency of its operations. Players in the import market, where a large number of SMEs operate are optimistic of employing new staff under the current business environment that has seen the shilling lose nearly a quarter of its value against the dollar in the past eight months and the costs of raw materials have also escalated.

“The currency has remained weak and the cost of raw materials and credit has continued to rise,” said Mr Hansal Shah a director of Soko Sweety an importer and distributor of sweets and confectionery. “We however have to look at the alternative means of growing our business, including geographical expansion.”

More medium sized executives say they intend to expand into regional or internal markets in the medium term to cushion their operations against dependence on the domestic economy.

Mr Shah reckons that the urge to hire more staff is not necessarily based on the positive sentiment but the urge to do well. “It is not necessarily optimism of the business environment but the challenge to improve on past performance and grow that is forcing us to ‘look out of the box’ in these lean times,” he said.

At 51 points, SMEs confidence level is lower than the 67 points recorded for the same period in 2008 indicating that the harsh economic environment that has deepened with the onset of the global financial crisis and a rollout of power and water rationing has had a negative impact on the business leaders’ outlook.

The survey was conducted among 277 companies with an annual turnover of between Sh70 million and Sh1 billion, which had submitted their entries for this year’s Top 100 survey run by the Business Daily and consulting firm, KPMG. Some of the other challenges faced by the SME, according to the survey included poor infrastructure, political risk, finding the right quality of staff and access to adequate credit and financing.

The government in attempts to get the economy back on track, has employed the Economic Stimulus Programme which will see an estimated Sh22 billion released to the economy most of it finding its way to infrastructure projects.

Also, the government is betting on banks to break the vicious circle by revving up lending in an effort to stimulate the economy through increased consumer consumption.

Central Bank of Kenya (CBK) has already cut the Central Bank Rate (CBR) four times over the past year and reduced the Cash Reserve Ratio from six to five per cent expecting commercial banks to transfer the same benefits to the customer in the form of cheaper credit.