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Personal Finance

Throw small enterprises lifeline to tide over Covid-19 pandemic

If there was a time that micro and small enterprises badly needed a leg-up, it is now.
If there was a time that micro and small enterprises badly needed a leg-up, it is now. FILE PHOTO | NMG 

If there was a time that micro and small enterprises badly needed a leg-up, it is now. The disruption that the Covid-19 crisis has unleashed threatens to bury the dreams of many youthful entrepreneurs. This would cut off sources of livelihoods, slow down wealth creation and reverse gains made over the years in poverty reduction amid high unemployment levels.

Now more than ever, initiatives to support micro and small enterprises need to be put together to offer lifelines at a time when such businesses are taking the hardest hit. Kenya Climate Innovation Center has launched an AgriBiz call that is supported by the European Union and the Danish Governments aimed at selecting agricultural related businesses owned by the youth and women. The programme will provide financing as well as technical assistance to the short listed businesses.

Micro and Small Enterprises Authority (MSEA) join in by coming up with a programme to support micro and small enterprises especially now that the government has not indicated any direct fiscal bailouts for struggling businesses.

The AgriBiz programme addresses the key challenges that hinder youth and women from tapping into the immense potential that the agricultural sector offers and will help 2,400 agribusinesses owned and led by women and youth to grow.

These enterprises will create 17,000 job opportunities along the agricultural value chains and will increase smallholder production and household incomes. Improved agricultural production will have a positive ripple effect on food security, one of the pillars of the Government of Kenya's Big Four Action Plan.

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MSEA is in a really good place to put up a mechanism(s) that would be of help to the micro, small and medium enterprises. The agency has been in operation for over six years and not much has been heard from it. It was created to advance the interests of informal sector traders, including providing structures to formalize the sector and extending subsidised credit lines with creation of an MSEA fund.

Recently the agency was provided with a Sh15 billion package towards job creation initiatives through the support of businesses through the provision of technical assistance and financing. World Bank provided the said funding through the Kenya Youth Employment and Opportunities Project (KYEOP) which MSEA is the implementing partner.

Through the above and similar interventions, there is need to target youth and women due to the fact that they are the most vulnerable when it comes to unemployment. To achieve success, any intervention will be required to provide support in the form of financing to businesses - grants, semi commercial financing as well as commercial financing. Technical assistance in the form of advisory services, training and mentorship will be critical to make the businesses to scale.

With the coming new normal as a result of the virus, there is need to move the processes of application, vetting and supporting of businesses to the virtual space. The old model which required physical application and physical interaction during the vetting and support period is dead and will not work at this time when the enterprises desperately need capital lifeblood to avoid dying off.

What needs to be done is that verification should be designed in a simple, user-friendly way considering the targeted group. Additionally, the funds and the support should be provided only to sectors with high chances of thriving under the prevailing circumstances like masks and other personal protective equipment production, ICT and food supply. Structures and processes need to be innovative to ensure that there is no misuse of funds. The grants and commercial finance issuance process should, therefore, not be frozen, but adjusted. Capital injection will certainly go a long way to keep cottage industries running, creating jobs and putting cash in the youth's and women pockets.

This will see the country emerge with a stronger base for cottage industries that could be built upon for industrial takeoff. Unprecedented times call for bold and innovative approaches and this is exactly what is required in the enterprise development sector.

Enterprise support mechanisms need to explore opportunities and solutions for overcoming challenges that has been presented by Covid-19 to the existing business incubation and ecosystem models.

Over time business incubators and accelerators have offered business support and guidance through physical interactions. Typically, incubation services have been offered at a central location with one-on-one interactions being the main mode of engagement. However, with the revolution of the internet and current pandemic, virtual business incubation will be the new normal.

It offers business support online across geographical boundaries, providing all facilities needed such as resources, consultation, training and engaging with investors.

This is a world remade and calling for strategy modifications.

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