Access to finance remains a challenge to MSMEs

NAIROBI, KENYA: Women in Micro, Small, and Medium Enterprises (MSMEs) play a pivotal role in Kenya’s economy contributing significantly to the labour force.

Despite the effort, access to affordable finance remains a challenge to many.

“MSMEs are employing approximately 14.9 million Kenyans in various sectors of the economy and a bulk of them are both youth and women-led,” noted Dr Shem Ochuodho global chairman of Kenya Diaspora Alliance.

“The MSMEs in Kenya however face numerous constraints in accessing affordable finance for their enterprises.”
He was speaking at a virtual event organised by the Kenya Diaspora Alliance and women in Business and Jua Kali Federation.

According to the World Bank report on SMEs entrepreneurs, women make up nearly half of all Micro, Small and Medium Enterprises owners and 40 per cent of smallholder farm managers, yet they have less than 10 per cent of the available credit and less than one per cent of agricultural credit.

The potential contribution of the Diaspora to Kenya’s economic development goes beyond personal remittances, noted speakers at the event.

According to Dr. Ochuodho, African Diasporas remit about U$ 85 billion per year.

Remittances from people living outside the country has been increasing rapidly with even the Covid-19 season failing to shut down the spirit of Kenyans sending money back home.

Remittance inflows into Kenya jumped by nearly 11 per cent in 2020 to over Sh300 billion as technological innovations helped people overcome the economic struggles brought on by the coronavirus crisis to send more money home.

“In Kenya, remittance inflows were strongly buoyant in 2020, despite the devastation by COVID-19 (coronavirus) in the source countries,” the Central Bank said in a statement.

It said remittances reached a historical peak of $299 million in December 2020 alone.

“This remarkable growth of remittances has been supported by financial innovations that provided Kenyans in the diaspora more convenient channels for their transactions,” the bank said.

Apart from contemporary Diasporas, there are also historical Diasporas, some of whom are desirous to either relocate back to, invest in or do business with Africa. The African American alone, for instance, is believed to have a spending capacity of US$ 1.2 trillion, part of which could make its way as investment, tourism, business or trade with Africa. That is a figure higher than the GDP of any individual African country.

Other Diaspora contributions range from knowledge exchange, increased trade links, and better access.