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Corporate

Services firms beat rivals in SMEs contest

KPMG chief executive Josphat Mwaura (left), Lands permanent secretary Dorothy Angote (second left) and East African Community permanent secretary David Nalo (right) present trophies to Joanne Mwangi,  after her firm, Professional Marketing Services, won this year’s Kenya Top 100 SME award. Photo/FREDRICK ONYANGO
KPMG chief executive Josphat Mwaura (left), Lands permanent secretary Dorothy Angote (second left) and East African Community permanent secretary David Nalo (right) present trophies to Joanne Mwangi, after her firm, Professional Marketing Services, won this year’s Kenya Top 100 SME award. Photo/FREDRICK ONYANGO 

Aggressive marketing by Kenyan companies seeking to reposition their brands in a recovering economy lifted services industry firms to the top of this year’s small and medium enterprises competition.

Professional Marketing Services beat 247 contestants to win the competition that honours Kenya’s fastest growing and well managed small and medium sized companies.

This year, five of the top 10 winners of the survey came from marketing and communication sectors, pointing to the rising importance of the services industry in Kenya’s economy.

The steady rise in the services sector’s power has been attributed to the expansion of Kenya’s middle class in the past seven years, which has put the domestic consumer in the driving seat of the country’s economy.

“A vibrant consumer market needs the support of professional services such as branding, marketing and advertising to remain on course,” said Jeremy Stanley of Scion, a UK-based consumer markets researcher.

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The winner of this year’s competition, Professional Marketing Services, is the brainchild of Joanne Mwangi, a marketing professional, who left a well-paying marketing job in corporate Kenya to pursue enterprise 15 years ago.

Ms Mwangi, whose last job was with Colgate, walked into the unpredictable world of entrepreneurship in her 20s and says her journey was initially marked by eight years of painful struggle in a hostile business environment that only improved with the change of government at the end of 2002.

“Since then, we have been growing at the average annual rate of between 60 and 75 per cent save for 2008 when like everyone else we suffered the consequences of post election violence,” she says.

Ms Mwangi attributes Professional Marketing’s exponential growth to the better understanding of branding and appreciation of marketing by Kenyan firms – most of who would never spend a cent on marketing 10 years ago.

“Our growth is mainly the product of the rapid expansion in the client base,” says Ms Mwangi pointing to the fact that understanding of marketing’s role has seen players in sectors that never used to market their services such as construction and government come in board.

That expansion, Ms Mwangi says, has helped reduce her firm’s dependence on a few big corporate clients and diversified her revenue sources for better stability.

Professional Marketing’s victory also marked a milestone for the Top 100 SME survey as it was the first time that a lady entrepreneur walked away with the top prize.

The firm’s victory is however in tandem with the strong growth that has been registered in the mainstream media and media services companies such as Scangroup and Nation Media Group in the first six months of the year.

Scangroup, a creative, PR and media buying giant has reported ….. per cent profits growth in the first half of the year powered by increased revenue flows from the build up of activity from large corporations.

Ms Mwangi also won the leading lady entrepreneur award at the evening ceremony held at Nairobi’s Carnivore grounds.

Design Corporate took the second position, followed by Computer Planet.

Ultimate Engineering took the fourth position while Flooring & Interiors moved up two places from last year’s competition to rank as the fifth best enterprise in Kenya.

Winners of the Top 100 SME survey are recognised every year at a colourful gala event where they received trophies and get membership to the Top 100 Club for a year.

This year, each of the top 10 winners received a free Enterprise Resource Planning (ERP) software solution from Sage Pastel, a software solutions company that was among this year’s sponsors of the competition.

The software, which is popular with SMEs, helps to facilitate the flow of information among all business functions in an organization as well as manage the relationships with external stakeholders.

Two top winners of last year’s Top 100 SME edition graduated to Club 101 having grown to cross the competition’s upper annual revenue limit of Sh1 billion.

Top 100 SME competition is limited to firms with annual revenues of between Sh70 million and Sh1 billion.

Mellech Engineering – the winner of the 2009 competition and Ramco Printing were initiated into the corporate Kenya club in the organisers of the competition said signals where future growth is going to come from.

“These achievements leave no doubt as to where Kenya’s next multinationals will come,” said Mr Linus Gitahi, the chief executive of the Nation Media Group adding that with a total of Sh100 billion in revenue to their names, the 247 SMEs turnover is equivalent to 10 per cent of Kenya’s annual budget.

“Because there are hundreds of SMEs out there who did not participate in this competition just shows you where the strength of our economy is,” said Mr Gitahi.

Senovate, the consumer market research firm that conducted the Top 100 SMEs survey found that 11 of the participants had annual turnovers of between Sh900 million and Sh1 billion.

The majority of Kenyan SMEs however have turnovers of between Sh100 million and Sh300 million.

The SME sector employs close to 80 per cent of Kenya’s total workforce and contributes about 20 per cent to the gross domestic product, according to the Kenya National Bureau of Statistics.

This year’s survey revealed that sale of goods and services in neighbouring Uganda and Tanzania was the top most driver of revenue growth in 76 per cent of the SMEs, positioning East Africa’s integration effort at the centre of the Kenya’s economy.

“This growth of SMEs from exports to the region proves that the EAC Common Market is already working and there is no need to wait,” said Mr David Nalo, the Permanent Secretary in the Ministry of East African Community Affairs.

With a combined population of 126.6 million people, the EAC is seen as presenting an expanded market for enterprising East Africans with Kenya, which has a comparatively more advanced enterprise sector, expected to take the lead.

While Kenyan firms have rushed to exploit opportunities in the region, analysts say partnerships with locals in foreign countries will be critical to building trust that is needed for successful entry into new markets.

Mr Gitahi asked Kenyan entrepreneurs to form alliances that can help them compete on an equal footing with rivals from emerging powerhouses in Asia like China and India for government contracts.

Mr Josphat Mwaura, the chief executive of KPMG, said that in light of the critical role that SMEs have assumed in the Kenyan economy, the entrepreneurs must get ready to demand quality services from the State.

This is the third time the competition has been held in Kenya. Uganda will hold its version of the event later this month.

Winners of the Top 100 survey are picked based on key benchmarks including turnover growth, profitability, and financial stability.

To enter the annual Top 100 competition, firms need to have an annual turnover of Sh70 million to Sh1 billion and have audited accounts for the past three years.

The competition excludes firms listed at the NSE and banks and insurance companies.

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