Over the past few years, Micro, Small, and Medium Enterprises (MSMEs) in Kenya have experienced challenges that have significantly impacted their operations and viability.
From inadequate government support and poor infrastructure to limited access to capital and markets, these challenges have placed immense pressure on these enterprises, making it increasingly difficult for them to remain competitive and profitable.
Still, MSMEs remain the backbone of many economies worldwide. In Kenya, there are about 1.5 million formally registered MSMEs and more than 5 million informal MSMEs across all sectors of the economy including wholesale and retail trade, manufacturing, and food services. These businesses collectively generate 30% of the country’s GDP and provide non-agricultural employment.
Recognizing the crucial role of MSMEs in the Kenyan economy, Absa Bank Kenya has stepped in to empower these enterprises amid the prevailing economic uncertainties. The bank has launched a series of initiatives aimed at addressing the challenges faced by MSMEs and providing them with the necessary support to thrive.
In October 2023 during Absa’s Annual Business Club Forum, the bank committed Kshs. 100 billion to support MSMEs. This funding commitment aims to spur the development of MSMEs across various value chains, thereby improving the sector’s resilience by offering ready access to working capital. This initiative further cements the Bank’s role in catalyzing Kenya’s economic growth and development.
Recognizing the pivotal role played by MSMEs in Kenya’s economy and their need for financial support, Absa Bank Kenya’s Managing Director and CEO, Abdi Mohamed, underscored the organization’s commitment to continue investing in the growth of the sector.
“As a Bank, we are fully cognizant of the immense contribution that MSMEs make to Kenya’s economy through job creation and their contribution to the Gross Domestic Product (GDP). We particularly recognize the need to avail sustainable finance solutions and expertise to cushion these businesses in times of unexpected downturns. The support we are committing today aims to ensure that MSMEs have ready access to capital that enhances their resilience,” he said.
The funding initiative aligns with Absa Bank’s four-pronged approach for SME customers, focusing on access to markets, information, mentorship, and sustainable finance. This comprehensive strategy aims to empower MSMEs by providing them with not only financial support but also the necessary tools and guidance to navigate the challenges of the business landscape.
It will also ensure that priority value chains in Kenya’s economy, including leather, cotton, dairy, edible oils, tea, rice, the blue economy, minerals, forestry, and building materials, are emboldened as key drivers for job creation and economic development.
The announcement of the Kshs. 100 billion commitment comes on the heels of Absa Bank Kenya’s recent launch of the Wezesha Stock proposition. This real-time digital platform aims to revolutionize inventory management and trading for SMEs, further enhancing their access to financing.
In addition to the initiatives, Absa Bank Kenya has existing products, capacity, and mentorship programs tailored for small businesses.
Good examples include the Wezesha Biashara program and the Absa She Account.
Wezesha Biashara program funds existing businesses to grow, providing unsecured loans of up to Ksh 10 million, up to 95% asset financing, and much more.
Absa SHE (See Her Empowered) Account, on the other hand, targets women in the SME sector with unsecured lending of up to Kshs.10 million, payable over 5 years for existing borrowers, and Kshs. 7 million for new borrowers payable in 4 years. The initiative aligns with Absa’s women’s agenda and commitment to empowering over 1 million women entrepreneurs across the country with the necessary financial and non-financial support to enable them to scale up and take their businesses to the next level over the next five years.
Meanwhile, as the global business environment remains uncertain, Absa Bank Kenya’s commitment to investing in small businesses reflects its dedication to empowering MSMEs and providing them with the financial tools and support needed to thrive amidst economic challenges.