Micro, Small and Medium Enterprises (MSMEs) are the backbone of the Kenyan economy, contributing over 40% of GDP and employing over 80% of the workforce.
However, they face many challenges such as lack of formalisation, low productivity, limited access to finance, poor record-keeping and low value addition.
To address these challenges, the Kenya Bankers Association (KBA) launched the Inuka Enterprise Program in 2019, a five-year initiative that aims to support MSMEs in terms of access to finance, capacity building, value addition and market linkages.
The program has partnered with various stakeholders such as banks, government agencies, development partners, business associations and training institutions to provide holistic solutions for MSMEs.
Inuka Impact Evaluation Survey Report
On March 8, 2024, KBA unveiled the Inuka Impact Evaluation Survey Report 2024 at a hotel in Nairobi. The report is a comprehensive assessment of the key aspects crutial to the sustainability and growth of MSMEs in Kenya.
It analyses the demographic profile of MSMEs, their formalisation status and impact on business growth and job creation. It also evaluates the capacity-building initiatives and opportunities for value addition, alongside assessing access to finance and record-keeping practices.
The report reveals findings on the state of MSMEs in Kenya.
– The program has reached over 70,000 MSMEs across the country, with a majority being women-owned (60%) and youth-owned (40%) businesses.
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– The program has facilitated access to finance for over 7,000 MSMEs, amounting to Ksh.5.84 billion over the period of five years. The program has used risk-based pricing to ensure that no SME fails to access funding based on their credit score or collateral. The program has also promoted relationship banking, where banks assess the character and performance of borrowers rather than just their financial statements. This has led to improved risk profiles over time and access to higher limits at lower prices for MSMEs.
– The program has provided capacity building for over 50,000 MSMEs through various channels such as webinars, workshops, mentorship programs, online courses and mobile applications. The program has covered topics such as business planning, financial management, record-keeping, marketing, branding, customer service, quality standards, innovation and digital skills. The program has also sensitised MSMEs on the benefits of having a good credit score and how to improve it through regular payments and proper record-keeping.
– The program has enhanced value addition for over 10,000 MSMEs through various interventions such as product development, packaging, labelling, certification, market linkages and e-commerce. The program has helped MSMEs to diversify their products, improve their quality, access new markets and increase their sales and profits.
The report also identifies some areas of improvement and recommendations for the future of the program. Some of the suggestions are:
– To increase the uptake of credit by MSMEs, the program needs to scale up its awareness and outreach campaigns, especially in rural and marginalised areas. The program also needs to address some of the barriers that prevent MSMEs from accessing finance such as high interest rates, stringent requirements, lengthy procedures and lack of information.
– To improve the impact of capacity building, the program needs to tailor its training content and delivery methods to suit the needs and preferences of different MSME segments. The program also needs to monitor and evaluate the effectiveness of its training interventions and provide follow-up support and feedback to MSMEs.
– To boost value addition, the program needs to facilitate more linkages between MSMEs and other actors in the value chain such as suppliers, processors, distributors and consumers. The program also needs to leverage on technology and innovation to enable MSMEs to access new opportunities and markets.
Future Endeavors By KBA
The report concludes by acknowledging the achievements and challenges of the program and reaffirming KBA’s commitment to supporting MSMEs in Kenya.
“There’s room for improvement going into the future and number of intervention can be improved through capacity building. We have trained over 70,000 but only 10% have access to finance. There’s room for growing these numbers,” said Samuel Triongo, the Director of KBA Centre for Research on Financial Markets.
