More than 70,000 Micro Small and Medium-sized Enterprises (MSMEs) across Kenya accessed the Inuka financial literacy training by the end of January this year.
- The Kenya Bankers Association (KBA) unveiled the program in 2018 to unlock growth opportunities for businesses in the informal sector through capacity-building initiatives.
- Many enterprises are unable to expand their operations because they are incapable of accessing credit.
- In the KBA report 2024 on MSMEs, 94% of small business owners who joined the Inuka programme within the last five years have acknowledged that the training helped them to better manage their revenues.
MSMEs account for 34% of Kenya’s Gross Domestic Product (GDP) and create jobs for 15 million people, according to 2015 and 2016 reports from the Kenya National Bureau of Statistics (KNBS). They are crucial in keeping the economy running by facilitating competition, penetrating new markets, and spurring innovation.
“Initially conceived as a capacity-building initiative, the program has evolved significantly over the years, adapting its activities to meet the dynamic needs of the MSME ecosystem,” said outgoing CEO of the Kenya Bankers Association Habil Olaka.
Micro-businesses accounted for 84.2% of Inuka’s beneficiaries while only 1.9% of medium-sized enterprises sought the training. Only 32% of the beneficiaries had mid-level college degrees. The predominant use of English when communicating with many small business owners cratered the interest and commitment of entrepreneurs in rural and informal settlements.
- About 48% of enterprise owners rated the entire training module as ‘Excellent’ and another 40% commented it was ‘Good’.
- Both Marketing and Financial Management modules accounted for the highest approval rating with 33% of MSMEs owners specifying them as ‘Excellent’.
- 73% of the enterprise owners who undertook the course to completion mentioned that their sales had gone up thanks to the training they received.
A bulk of MSMEs are owned by individuals aged 26 – 45 years old. The unemployment rate in Kenya has forced many individuals in their prime to create their own income avenues. The KBA report notes that early mentorship through specialized programmes would prevent small businesses from closing shop but access to capital, especially among the youth, remains a challenge.
75.7% of Inuka’s beneficiaries affirmed that they had increased their workforce after taking part in the programme. Before the establishment of the Inuka programme, MSMEs barely applied for bank loans with 21% of the business owners citing complex procedures and 28% attributing their reluctance to high interest rates precipitated by national monetary policies. The emergence of Fintech solutions, mobile wallets, and instant loan apps further drove the wedge between bankers and the informal sector.
Record Keeping and Tech
The report records that relative success has been witnessed in the collaboration as 89% of MSMEs in the programme owned and actively began operating their bank accounts. As 92% of the beneficiaries learned proper record-keeping skills, KBA is optimistic that these businesses will sooner or later be eligible for both short-term loans and overdraft facilities.
“The quality of the loan book, that is the portfolio at risk, generally for customers we have trained, has improved,” a bank within the KBA umbrella said.
However, further engagement with the MSMEs sector will require a more targeted approach. The informal sector has a diverse range of specific issues that banks may be overlooking in their mentorship programmes.
“The rapid pace of technological advancement in finance necessitates continuous adaptation. The program’s ability to integrate these advancements is crucial for its long-term viability,” the report states.
