The captain steering Grofin-Kenya to new heights

By Morris aron

With his composed and carefully modulated tones, Kenneth Onyando radiates the image of a man who is rarely ruffled.

The 48 year-old six-foot, bespectacled general manager of Grofin-Kenya is a striking new presence in the Small and Medium Enterprises industry, which could herald real change in the sector in just a couple of years.

Picture this. Mr Onyando is the regional head of Grofin Kenya subsidiary of Mauritius-based Grofin Africa Fund, which controls over Sh12 billion ($170 million), money that they lend to the SMEs across seven countries in Africa.

"For some funny reason all I wanted to be when I grew up was a land economist," says Mr Onyando.

"It was interesting how my path and SME funding programmes crossed from the first formal employment in a leading commercial bank after clearing university."

Managing SME

Several years later after joining the banking industry as a management trainee, Mr Onyando was put in charge of managing a cluster of SMEs which were either looking for financing from the bank he was working with, or which had just secured funding and needed constant follow up of their operations.

The Maseno old boy did not realise that such was the beginning of a long-term career in the SME sector until way later on when he was head hunted to head GrofinÌs operations in Kenya.

"At first I was a bit hesitant. But after realising that what the firm was offering was basically what banks could not give the SME sector due to policy constraints, I realised the opportunity that this meant."

That was five years ago, and since then, Mr Onyando has overseen the disbursement of $14 million (Sh1.2 billion) to over 30 SMEs, the process injecting a lifeline to firms after securing capital from Grofin-Kenya.

GroFin, which sources its funds from big name investors including CDC, Shell Foundation, GroFin Investment Holdings, Skoll Foundation, Syngenta Foundation, Deutsche Bank, among others, wants to bridge the gap left by banks in helping SMEs fulfill their capital requirements.

Late last year, Grofin Africa Fund landed the largest ever growth finance fund, worth Sh12 billion ($170 million) to be invested in 500 small and medium enterprises across Africa.

Strained for cash

From this, Kenyan entrepreneurs strained for cash will have access to Sh3 billion ($43 million) fund, although the limit can be passed depending on the level of need and demand.

Grofin-KenyaÌs operations focus on providing funding to SMEs that are looking for capital to expand their operations, but have been blocked by mainstream banking institutions due to lack of collateral and other stringent terms. The firm targets SMEs, which qualify for loans of between Sh3.6 million ($50,000) and Sh72 million ($1 million) at competitive interest terms.

For firms to qualify for the loans, they must have employees of not more than 100 people, an annual turnover of less $5 million, and a total asset base of not more than $3 million.

Demonstrate ability

Any firm looking for financing from Grofin need not have collateral that covers its financial requirements, but instead should demonstrate that it is able to generate cash flow from its operations, and is a viable business.

"Unlike other financial institutions that would require one to comply to a certain set of requirements, Grofin evaluates firms on a case by case basis, and the loans are normally awarded based on our assessment of the firmÌs ability to generate revenue in the medium to long term," says Mr Onyando.

"Our decisions as to whether a firm is viable or not just as simple as its ability to generate cash flow from its operations."

SMEs that qualify for funding will also benefit from technical support on best business practices to help them grow their enterprises.

The fund targets all sectors of the economy with no preference for any particular field, with the exception of businesses that are engaged in primary agricultural activities. However, those involved in agro-processing would however qualify for funding.

GroFin has already funded a bore hole drilling company which operates in Nairobi and its environs, a development which helped the company acquire more drilling machines, and is now set to expand its services to the wider East African economies.

The firm has also financed an animal feeds manufacture plant with a processing plant on the outskirts of Nairobi that recently won a major tender with a leading milk processing firm. Moreover, Grofin Kenya funded a real estate business firm that is set to open up a high-end hotel business in the next couple of months.

New branch

Just last month, it opened up a new branch at the coastal city of Mombasa, where it hopes to spread the same advantages to the region. It plans a countrywide reach in a couple of years.

For the former rugby player who also served as a director of Kenya Rugby Football Union schools and development between 1994 and 2002, the SME fight is far from being won. He reckons that there is need for more training on business planning to help entrepreneurs understand where they are, and where they intend to go.

"We need to come up with quality assurance mechanisms for SME, and encourage light industrial manufacturers to open up opportunities for their products to gain worldwide recognition through approvals from such organisations as Kebs and others,"says Mr Onyando.

But above all: "Lets do away with empty rhetoric of selfish politics and focus on actual results.Ó

His definition of success?

"Seeing the fruit of what you do reflected in on other people and firms."

And with that Kenyan SMEs have a reason to hope.