Kenya Bankers Association, a lobby group for commercial banks in Kenya, has been running an online platform (inukasme.co.ke) where entrepreneurs can access valuable information on how to overcome challenges that may cripple their start-ups and small businesses.
Visitors to this platform get free access to important knowledge, including practical case studies ranging from how to increase crop yields, and rebuilding one’s business after a failed attempt, to marketing through cost-effective channels such as social media.
Complementing the online program are face-to-face training sessions sponsored by KBA member banks.
KBA has worked hard to champion sector-wide initiatives such as PesaLink, the Inuka Enterprise Programme and Sustainable Finance Initiative that complement efforts by individual banks to increase industry efficiency and relevance, while combating the systemic challenges we face as a countryHabil Olaka Chief Executive Officer-Kenya Bankers Association.
Figures contained in The Banking Industry Shared Value Report, 2019, show that there are approximately 7 million Micro, Small and Medium-sized Enterprises (MSMEs) of which more than 80 per cent are informal and unlicensed.
These businesses contribute to the employment of more than 13 million Kenyans and contribute 28 percent of the National GDP.
According to the Central Bank of Kenya, the introduction of the Banking (Amendment) Act in September 2016 reduced lending to the MSMEs, contributing to a 1.4 percent decline in the growth of GDP.
CBK has also separately stated that bank lending to SMEs has reduced by as much as 5.7 percent or KSh 13 billion due to the interest rate caps. This has had a negative effect on the sector’s role in Kenya’s realisation of the Big Four agenda and the Vision 2030 development blueprint.
KBA has been analyzing how Kenyan banks are working with the various stakeholders in the public and private sectors, aligning to the national development agenda and Vision 2030 aspirations.
Recent KBA reports on credit needs of MSMEs found that while these businesses form the driving force of the economy, many find it difficult to not only access finance, but also get through the operational hurdles that see 80 percent of start-ups fold within their first year of operation.
The high rate of business insolvency is indeed a concern for financiers and the Government which relies on small enterprises to ensure sustainable economic development.
To fill the capacity gap, KBA in October 2018 launched the Inuka Enterprise Programme. Together with the Kenya Institute of Management (KIM), Kenya National Chamber of Commerce and Industry (KNCCI) and the Kenya Association of Manufacturers (KAM), Inuka facilitates access to finance through training, networking and coaching opportunities.
A year down the line, the Inuka Programme has reached more than 1,400 MSMEs, including budding entrepreneurs in Nairobi, Nakuru, Kisumu, Homa Bay, Turkana, Marsabit, Wajir, West Pokot, Kiambu, Meru, Kisii, Mombasa, Tana River, and other locations across Kenya.
The goal is to reach thousands more in the coming months. Inuka Enterprise Program aims to empower micro-enterprises to formalize, small enterprises to professionalize their management and medium enterprises to optimize operations and increase their economic productivity.
This initiative is sponsored by the Kenya Bankers Association with the objective of enhancing MSMEs ability to access finance from banks.
Alongside the Inuka Enterprise Programme, KBA launched the Y-Bizna (Youth in Business) initiative in 2017 in partnership with the Kenya Community Development Foundation (KCDF).
The programme targeted 300 vulnerable young men living and working in informal settlements in Nairobi and Mombasa. The Y-Bizna implementing partners were Youth, Arts, Development and Entrepreneurship Network in Nairobi and the Dream Achievers Youth Organization in Mombasa.
Y-Bizna engaged young men from Mathare, Huruma and Kariobangi in Nairobi and Kisauni in Mombasa to counter effects of radicalization and crime attributed to high levels of unemployment in slum communities.
KBA has set aside KSh1 million fund that provides the young men interest-free loans to start or scale up their micro-businesses.
Supported by the banking industry, the Y-Bizna youth are now active participants in the formal economy. Y-Bizna is a pilot project that informs how banks can contribute to youth employment creation.
AT A GLANCE
- KBA was founded on 16th July 1962. Today, it is the financial sector’s leading advocacy group and banking industry umbrella body that represents total assets in excess of US$ 40 billion.
- The association has evolved and broadened its function to include advocacy on behalf of the banking industry, and championing financial sector development through strategic projects such as the launch of the industry’s first P2P digital payments platform PesaLink.
- In line with the Government’s policy on public-private partnerships, KBA and Central Bank of Kenya have implemented key projects such as modernization of the National Payments System through the Automated Clearing House, implementing the Real Time Gross Settlement System (RTGS), and the Kenya Credit Information Sharing Initiative.
- KBA members are comprised of commercial banks and deposit-taking microfinance banks.