There are an estimated 1.6 million licensed small and medium enterprises in Kenya that account for employment of about 16 million Kenyans both directly and indirectly.
This is according to Standard Chartered Bank Chief Executive Officer Kariuki Ngari when he talked to the online forum #CEOChat.
#CEOChat is a quarterly online initiative created by the Kenya Bankers Association to provide a platform for bank chief executive officers to engage with the public on various topics on banking.
Ngari added that MSMEs had made a huge contribution to the Kenyan economy and would continue to do so.
Ngari noted that technology was going to be a major enabler and would revolutionalise how businesses operate in the next decade.
Friday's topic was Strategies of Enhancing Enterprise Creditworthiness.
Ngari spoke on topics that ranged from legal compliance, managerial issues, and available opportunities that enterprises can take up so they can grow their ability to access credit for business growth.
He also responded to questions posed by the public.
"There are a couple of things that an enterprise can undertake to enhance its credit worthiness. One is good record-keeping; it is very important to have good records of your sales, your costs, or in business speak, proper management of your accounts," said the stellar banker.
According to him, the bank is only able to give credit upon assessment of existing cash flow.
"Profitability, cash flow, liquidity and capital structure (or how much capital the shareholders put into the business), are important in gauging the creditworthiness or the ability of the business to take on debt," he added.
Ngari also advised on proper financial management, citing examples like avoiding bounced cheques that could cause possible pitfalls.
Emphasising further on the importance of record keeping, the banker said it was very important to have a proper management of accounts to ensure returns as required by regulatory authorities, such as tax returns, are up to date.
Capacity building is another area he touched on emphasising that, entrepreneurs should invest in training themselves on how to manage the business.
"Today quite a number of banks have programs that equip customers with business and management skills. Find out from your bank and take time to attend," he said.
Ngari said good management ensures that there is a viable business that lasts and can meet its obligations (the nature of MSMEs in Kenya is typically a one-person business).
He also advised Kenyan entrepreneurs to embrace technology as a means of advancing business operations and taking advantage of the available opportunities
"Another opportunity for MSMEs is in the trade arena. We have seen Kenya make trade agreements with UK, the Africa Free Trade Continental Area (AfTCA) and most recently US talks. We need to be aware of these opportunities and participate fully," he said.
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