SMEs play a crucial role in the economy. The sector provides nearly 80 percent of the employment opportunities in Kenya.
According to statistics, the majority of the SMEs operate in the informal sector, which is an estimated 98 percent of business in Kenya, contributing 30 percent of jobs and three percent of the gross domestic product (GDP). The sector is projected to contribute up to 50 percent of GDP in the next three years.
However, SMEs face substantial challenges, key among them limited access to finance that impedes their growth, according to SNDBX CEOJoram Mwinamo. At least 60 percent of SMEs in Kenya were denied funding in the last three years, a report by consultancy Wylde International shows. It cited a lack of collateral as the major reason for the snub.
Despite supporting the livelihoods of millions of Kenyans in all spheres of social classes, SMEs are closing down at a higher rate than five years ago. For the past five years, more than 50,000 SMEs have shut down rendering more than 150,000 people jobless.
Despite other factors such as regulatory failure, tough business environment, and corruption, there is a crucial element we are failing to address, advice for growth.
Being educated is being empowered. Through education, individuals are able to grind hard questions that hinder prosperity. With vast growth in technology, the majority of individuals are struggling to learn.
Entrepreneurs are failing to tap correct advice on how to grow their enterprises. Some of the consultants charge expensively that they cannot afford. In the quest to support SMEs, the government should provide free advice for growth to business owners.