Mombasa young entrepreneurs get lessons on staying power

Young entrepreneurs in Mombasa are the latest beneficiaries of financial and training support from a new venture capital firm in Kenya.

This follows the signing of a partnership between Longitude Finance (Lofin), which is also a micro lender and Kuza Project, an organisation working with the youth to reduce unemployment in the coastal town.

The deal will see members of Kuza Project, most of who are aged between 18 and 30 years, access short-term loans from Lofin which opened shop locally just two months ago and has so far offered Sh92 million in equity support to SMEs.

Repayment periods for the loans are between three and 12 months.

“Aside from financial support, the young entrepreneurs will get training in best business practice and financial management,” said Michael Monari, the Lofin founder and chief executive officer.

“The intention is to help hand-hold the SMEs so they achieve best business practice in order to remain sustainable in the long run.”

Some of the capacity it offers SMEs include writing business plans, lessons in tax compliance and proper record keeping.

Limited financial and management skills has seen many start-ups collapse, leading to financial losses and shattered dreams.

Better structures

Lofin, an insurer of short-term debts, sets no limits on loans it advances to start-ups. It is working with various funders globally who have committed Sh50 billion to support the SME sector in Kenya and subsequently East Africa.

Mr Monari said small businesses ought to be nurtured to a point they can stand on their own and gun for bank loans which require a track record to unlock the funds.

Lofin has a training manual on financial management, which, Mr Monari says, is updated regularly to reflect market needs and the best practice.  

“When the SMEs have better structures, the banks will eventually have the appetite to give additional capital,” he said.

The venture capital firm is also looking to buy a stake in banks, with the intention of increasing financial inclusion for businesses across the region.

The categorisation of businesses by size, nature and location by banks has, over the years, been blamed for locking out small businesses from the much-needed capital.

The government of Kenya has a youth enterprise fund and similar facilities for women in business in the quest to position the SME sector as a crucial generator of employment for the two categories.