Small and medium-sized enterprises (SMEs) have been tipped to consider alternative financing options through the capital markets to overcome credit obstacles limiting their growth.
Cooperatives and Micro and Small Enterprises Cabinet Secretary Simon Chelugui noted capital markets should strive to offer SMEs a range of instruments including debt and equity to increase their financing options.
Alternative finance models such as business angel investments, crowd-funding platforms, venture capital and public equity offer flexible terms and conditions to beneficiaries.
“I would like to challenge the SMEs to explore such alternative financial options,” Mr Chelugui told a forum for Small and medium-sized enterprises SME convened by the Nation Media Group (NMG).
A number of small and medium enterprises lack collateral for commercial bank loans thereby becoming perfect candidates for shylocks that eat out the profits they make.
Mr Chelugui said the SMES should also consider utilising Hustlers Fund which was launched on November 30 last year, and provides State-backed concessional loans to small businesses that have struggled to access financing from mainstream banks.
Official data shows Kenyans borrowed Sh22.2 billion from the Hustler Fund in three months, highlighting the growing popularity of the kitty seeking to increase financial inclusion, especially for low-income earners.
The first phase of the Hustler Fund saw borrowers access as low as Sh500 to a high of Sh50,000, with total repayment standing at Sh12 billion in the review period.
The State plans to expand the fund further by increasing the loan limit to Sh2.5 million, rivalling commercial banks, which have over the years perceived small traders as risky borrowers.
The three-day SME conference and exposition organised in partnership with the Kenya National Chamber of Commerce and Industry (KNCCI) has attracted 15,000 participants, which is more than double the 6,000 it attracted in 2020 when it was first unveiled.
NMG chief executive Stephen Gitagama noted the exhibition offers the SMEs an opportunity to showcase their products, network, expand markets and innovate.
“We are exploring the possibility of doing county exhibitions in the near future,” he told the forum at the Kenyatta International Convention Centre (KICC).
This year’s conference marks its fourth edition and is themed around accelerating growth by the adoption of technology and innovation.