Business mentors move to boost SMEs’ growth

Small businesses are set to benefit from the expertise of members of an oversight group formed on Wednesday.

The Professional Business Mentors Association (PBMA) will be vetting business trainers and learning materials used by its members to curb the high rate of failure among small and medium-sized enterprises (SMEs).

The association has 65 members from Kenya, Tanzania and Rwanda who are currently training SMEs owners in their home countries. Lack of mentorship programmes is a leading cause behind the collapse of start-ups.

“Despite the fact that SMEs provide 70 per cent employment in the formal economy, conservative government figures show only three out of 10 start-ups in Kenya see their third birthday,” said Carol Murugo, the PBMA chief executive officer.

“There is need to impart skills and information on how entrepreneurs can sustain their businesses, whether or not they have had experience in running one.”

PMBA was registered in March and membership is open to people trained and certified as professional business mentors.

The association is the brainchild of Inoorero University’s Regional Centre for Enterprise Development in partnership with Chase Bank.

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A survey conducted by the Kenya Institute of Management (KIM) on 110 entrepreneurs under the Youth Enterprise Fund shows that 48 per cent of such ventures have less than a 50 per cent chance of surviving past their sixth year—the incubation stage.

This failure rate, where one in every three start ups is projected to fold up, is raising questions on the sustainability of the fund which is already struggling with high default rates.

Juma Mwatate, the Youth Fund CEO, said it had initiated talks with Inoorero University for possible training of successful loan applicants as well as the fund’s own trainers.

“The youth we allocate money to can gain immensely from these mentors as one way of helping their businesses to take off,” said Mr Mwatate.

Since its inception in 2006, the Youth Fund, whose main objective is to advance loans to over 12 million Kenyans aged between 18 and 35 has disbursed more than Sh5.2 billion.

The money has been shared amongst about 144,000 youth groups and 2,111 individual enterprises at the constituency level. The fund has, however, recently been in the spotlight for alleged embezzlement of resources.

The potential of SMEs in succeeding has seen commercial banks set up Business Clubs, that aside from training the members, offer them discounted domestic and international thematic trips.