Ways in which MSMEs Can Access Credit, Mentorship and Training Through Absa

Kenya has always thrived on the wheels of micro, small and medium enterprises (MSMEs). The sector has been and is still crucial in empowering people economically, facilitating financial inclusion, and enhancing daily economic activities in the country.

In a country whose unemployment rate has risen with each passing day, the small enterprise sector employs at least 86 percent of the population. Its benefits stretch to the growth and development of Kenya’s business and social prosperity.

SMEs continue to contribute 24 percent of the country’s GDP, 90 percent of private-sector enterprises, 93 percent of the total labour force in the economy, and 98 percent of all businesses in Kenya.

Evidently, these small businesses are an indispensable cog in the Kenyan economy. But even with such massive importance, the sector continues to face many challenges that have seen millions of them give up and close shop.

Some of the most common challenges that have often hit the SME sector hard include inadequate funding in terms of credit from most financial institutions, inaccessibility to ready markets, and inadequate knowledge on how to sustain their businesses in a pandemic such as Covid-19.

Statistics from the Kenya National Bureau of Statistics (KNBS) indicate that approximately 400,000 MSMEs do not celebrate their second birthday, and very few SMEs reach their fifth birthday.

The Covid-19 pandemic worsened the situation. Thousands of businesses shut down, and those existing today struggle to remain afloat.

A survey carried out by Kenya Private Sector Alliance at the peak of Covid-19 indicated that SMEs were the hardest hit by the economic slowdown caused by the coronavirus pandemic. A total of 2,466 businesses participated in the survey, with 81 percent reporting they had been impacted by Covid-19.

Although the government set aside some funds under the Covid-19 economic stimulus program to support small businesses, there has been little progress in the sector.

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

It was, therefore, encouraging and reassuring when Absa Bank Kenya stepped in to tailor its operations towards financially supporting small businesses in the country, training, and sailing through these harsh and challenging economic times.

In 2020, Absa Bank launched a financial solution called Wezesha Biashara to help SMEs and MSMEs scale through financial distress. The product was launched to address some of the challenges small businesses face in their quest for growth, the key being lack of access to working and investing capital.

Through Wezesha Biashara, businesses can access:

• LPO Financing and Invoice Discounting of up to 50 million shillings
• Unsecured bid bonds of up to 10 million shillings
• Unsecured business loans of up to 10 million shillings payable in 72 months
• Up to 95 percent asset-based financing and working capital financing
• Islamic Banking business solutions for Islamic Customers through the La Riba proposition.

Apart from the several funding kitties Absa Bank has instituted over the past few years; it also launched a program called SHE Stars in 2021 to further cement its support for SMEs, especially women-led businesses. The program aimed to offer business skills training for female entrepreneurs running small businesses in various sectors of the economy.

This was part of Absa’s comprehensive strategy to adopt a holistic approach to MSME empowerment where business owners are trained on business sustainability, funding, bookkeeping and networking to ensure businesses are profitable.

The program encouraged face-to-face training, online sessions, and workshops. All this was geared to address business gaps and training needs that women entrepreneurs face, such as inadequate access to finance, mentorship, information, and markets.

The program came shortly after Absa Bank Kenya launched a financial product called the She Business Account. The account allows women-owned businesses to access funds through banking products such as unsecured and secured loans, trade finance, asset finance, property finance, and working capital facilities.

Absa Bank built the She Business Account with 4 key pillars in mind:

• Access to Finance – Where women entrepreneurs can access 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.
• Access to Markets and Information – Done through partnerships with institutions such as KNCCI, GIZ, and ITC/She Trades, empowering businesswomen in Kenya with information that will help them succeed in business through marketplace platforms to address gaps in business, management & leadership skills.
• Access to Mentorship and Coaching – Equipping women with critical financial and non-financial best practice skills to address gaps in business, management and leadership skills.

Through such programs, Absa Bank looks to ensure long-term sustainability of SMEs and MSMEs in Kenya as they strive to rebuild and grow. This is especially so because the current small businesses need guidance. For years, we have considered these businesses as personal initiatives and enterprises, but we often overlooked their importance to the general economy of Kenya.

For more information, reach out to Absa Bank Kenya today, and learn how your and your business can benefit from its programs and funding solutions.