TechnoServe has announced a new partnership with Moody’s to empower entrepreneurs in the informal settlements of Nairobi by helping them increase the profitability of their small retail shops.
The one-year project supported by the Moody’s Foundation will train 1,000 entrepreneurial duka owners (50 percent of them women) in Kenya on business and financial management skills. The initiative will help to expand a model that TechnoServe has successfully implemented with several partners.
“Mom and Pop” shops (known locally as Dukas) supply some 80 percent of consumer goods, mostly to low-income communities in Kenya. They provide a vital service that larger retailers and wholesalers cannot, as the market is fragmented with high transaction costs. Dukas face their own obstacles to growth, however. These retailers are mostly informal and operate on a cash basis. Restocking generally requires the owner to travel to a supplier—often a large retailer—with cash in order to make the purchase. This is expensive and time-consuming and results in periods of closure, limited inventory, stock depletion and ultimately relatively high prices for purchasers and low incomes for the storekeepers.
Overcoming these obstacles through shop management processes, accounting, marketing, financing, and technology presents an opportunity to unleash a wave of growth that would benefit low-income families with a wider range of goods at more affordable prices.
The Smart Duka project will include two cohorts (500 each) and will have an approximately two-month mobilization phase and a three-month training phase. The training received will increase profits by more than 30 percent and help more than one-third of the shops’ access to finance from various lending institutions.
Working with the Citi Foundation, MasterCard Center for Inclusive Growth, and elea Foundation, TechnoServe has demonstrated that supporting micro-retailers can be highly impactful. Since launching the Smart Duka Initiative in 2016, the project has reached over 5,300 shop owners (60 percent female).
Shops are reporting a 30 percent increase in profits. So far, the initiative has also helped shops access over $190,000 in credit. Smart Duka has also explored practical digital solutions that will enable Nairobi’s shopkeepers to manage inventory efficiently and make mobile payments.
“Micro retailers play a critical role in their communities, providing income to thousands of micro-entrepreneurs and making everyday products accessible to low-income communities. They hold the potential to improve hundreds of thousands of lives, but with limited business skills, they struggle to make profits. This project will provide targeted support, which will enable the micro-retailers to reduce their costs, increase profits and drive economic growth in their communities” – Alice Waweru, Regional Program Manager.
“Moody’s believes that long term social and economic growth prospects are heavily dependent on the success of micro and small enterprises in untapped communities. By partnering with TechnoServe we help to provide individual micro-entrepreneurs with the skills to build and grow sustainable businesses in today’s environment. An exciting insight for me is the multiplier effect of this program due to these entrepreneurs taking initiative to share the knowledge they gain with similar businesses and their communities.”- Sylvia Chahonyo, Head Relationship Management Africa.