Business incubation taking root in Kenya

August 27, 2008

, NAIROBI, August 18-Mention the words ‘business incubation’ in your conversation and you are likely to get blank stares.

Yet, business incubation simply refers to a process where start-up businesses are nurtured through the tough business stages and supported by providing the environment and facilities for them to thrive.

It is estimated that 70 percent of all new establishments fail. A myriad of reasons such as poor management, inadequate capital and a lack of planning are floated as some of the factors contributing to the low success rates.

And in a bid to address this challenge, eight companies have come together to form the Business Incubation Association of Kenya (BIAK).

They offer internet space, expertise, training, networking and skills development for budding entrepreneurs to ensure that they succeed in their endeavour.

Kenya Kountry Business Incubator (KeKoBI) is one of BIAK’s members, steering business incubation in the country.

KeKoBI Operations Manager Caroline Aoll says her company, which has been around for four years, is a private ICT-based incubator that was started with the support of the World Bank’s Information for Development Program (InfoDev).

Explaining that many people start their businesses at home in order to minimise costs on rent, Aoll says KeKoBI provides start-up companies with operating space from their two-floor offices at National Bank building.

Companies that benefit from KeKoBI’s help are chosen after a rigorous evaluation process. Once identified, she says, the entrepreneurs are taken through training, where experts in various fields are brought on board to address the challenges they are facing.

Going through all these stages helps to improve the business idea as well as assess its viability and potential, she adds.

Aoll explains that they have also subsidised training from Sh5,000 to Sh2,500.

“The companies within the incubator pay 50 percent of the Sh2,500 so they end up paying Sh1250,” she says.

Currently 37 companies are under KeKoBI incubation, where the budding entrepreneurs are being trained on drafting a business plan.

About 6 of them, she says, are set to graduate in September.

Aoll says her company will soon expand its services to Kisumu with the view to extend them around the country in the next few years.

But to effectively operate in the harsh business environment, Aoll is of the view that the government should give business incubators incentives that would enable them to offer support to the start-up businesses.

“We are lobbying that we be exempted from tax because when you are taxed, you pass on the costs to the start-up companies that can’t afford it,” she says.

Aoll cites tax incentives, rent and bandwidth subsidies as some of the support that the government should offer to encourage them to set up many incubators.

However, Information Permanent Secretary Dr Bitange Ndemo is of the view that the country needs to have many entrepreneurs in place before they can give any support.

Citing the ‘Madaraka’ project, where the government plans to develop an affordable locally assembled Personal Computer (PC), Ndemo says the government has been promoting business incubation and is ready to give incentives if people prove that they have an appetite for business incubation.

Madaraka was an incubation which didn’t kick off as the government couldn’t find investors to fund the project.

“We would rather have the people working. In the Madaraka case for example, we don’t have the youth asking for our support to take it forward,” he says.

He adds that they are coming up with various incentives especially for software developers which will in turn create employment opportunities for the youth.

“We have engaged a group called “Scankworks’ that will be providing jobs for the youth,” he reveals.

Responding to Aoll’s view that universities should not venture into business incubation, Ndemo maintains that universities have to offer it as they have the capacity for research.

Ndemo says the government is looking for funding to assist research in universities, but urges the Kenya Industrial Research Institute (KIRDII to start directing some of its funds towards ICT.

He has disclosed that together with the ICT Board, his ministry is pushing for the development of a Research Fund that would go towards the ICT sector.

“The government is supportive. It’s only that we haven’t fully implemented the resources that we have,” he reckons.

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