How Absa Bank Is Helping MSMEs Rebuild And Recover Post-Covid

Kenyan Micro, Small, and Medium Enterprises (MSMEs) have historically faced numerous barriers to growth. Small market sizes and low levels of regional integration preclude many private investment options. And amid the limited access to credit, the sector is reeling from the negative impact of the Covid-19 pandemic.

As part of celebrations to mark the MSME Day on June 27^th, Absa Bank Kenya has recommitted to work towards enhancing the financial needs of these small businesses to support their post-recovery journey.

With this year’s theme focusing on resilience and rebuilding, it is worth noting that MSMEs can only achieve this by re-strategizing their short and long-term goals to cope with the new realities – with support from both the public and the private sector.

MSMEs form the backbone of Africa’s economies and are the engine of the region’s job creation drive, accounting for 70 percent of employment.

Incidentally, by 2030, the world will need about 600 million jobs to absorb the growing global workforce, making SME development a high priority for all stakeholders. In most emerging markets, most formal jobs are generated by small businesses, which create 7 out of 10 jobs.

Sadly, the sector is still faced with a plethora of challenges. For instance, the African Development Bank (AfDB) recently reported that only 20 percent of African SMEs had access to credit. Also, banks fund only 9 percent of the investments SMEs make.

According to the Micro and Small Enterprises Authority (MSEA), only 7.1 million MSMEs are on record against the estimated 14.1 million operating in the country, evidence that the industry has seen bad days over the past few years.

A survey by the Kenya National Bureau of Statistics (KNBS) indicates that approximately 400,000 MSMEs do not celebrate their second birthday. Additionally, very few SMEs reach their fifth birthday, leading to concerns about the sustainability in this critical sector.

As the world celebrated MSME Day, it was also important to celebrate their resilience efforts while showing both technical and financial support. To this end, Absa Bank Kenya has committed to bringing the possibilities of these MSMEs to life through the financial and non-financial resources they need to realize them.

Absa Bank Kenya recognizes the need to work with these budding businesses to help them to get things done and succeed. Through the Wezesha Biashara product, for example, the bank commits to empowering you as a business owner to profitably bounce back from your challenges and grow your businesses through personalized propositions and products.

Wezesha Biashara is a financial solution tailor-made for SMEs and MSMEs. This financial product offers unsecured business loans of up to 10 million shillings payable in 72 months, 95 percent asset-based financing, and working capital financing. You also get LPO Financing and Invoice Discounting of up to 50 million shillings and unsecured bid bonds of up to 10 million shillings.

Better yet, Absa offers another financial product called the She Business Account. This account is targeted at women in business, mainly in the SME sectors, and is ideal today as MSMEs aim for rebuilding and resilience.

An International Trade Centre survey on the Covid-19 impact among businesses in 136 countries shows that nearly 62 percent of women-led small businesses have been strongly affected by the crisis, compared to just over half of firms led by men. The stats also showed that women-owned businesses were 27 percent more likely not to survive the pandemic.

In response, the She Business Account gives women access to unsecured lending of up to 10 million shillings payable over 5 years for existing borrowers and 7 million shillings for new borrowers payable in 4 years.

On top of these financial products, Absa has adopted a holistic approach to MSME empowerment where business owners are trained on business sustainability, funding, bookkeeping, and networking to ensure businesses are profitable.

For more information, reach out to Absa Bank Kenya today, and learn how to walk the post-recovery journey without a hassle.

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