Improve structures, SMEs advised

October 26, 2009

, NAIROBI, Kenya, Oct 26 – Local small and medium sized companies have been advised to improve their corporate governance structures in order to attract investments that would help them to grow.

Regional Manager of UNDP/IFC-funded African Management Services Company (AMSCO) Kofi Andah says many financiers shun the SMEs as they have corporate structures that cause them to be considered as high risk firms.

“When you hold all decision-making within one person and you go to a financial institution, they are going to find it very difficult to lend to you,” he said.

“They want a company that is properly run, that has structures in place, clear delegation of responsibilities and authority; that is the kind of business that they are interested in lending money to,” he explained.

While he acknowledged that the Kenyan SME sector is vibrant, he told Capital Business that its full potential could be harnessed if all these issues and the challenges they go through are addressed.

But while he cautioned against relying entirely on the government to help tackle their problems, Mr Andah advised these entrepreneurs to also join apex associations to enable them effectively lobby for their rights.

“It’s significantly easier for a KEPSA (Kenya Private Sector Alliance) or a KAM (Kenya Association of Manufacturers) to do that (lobby) than it is for one SME. I think it’s important that they are active members of these institutions so that they can influence policies,” said the manager of the firm that is mostly involved in skills transfer in 26 countries across Africa.

At the same time, he said the program through which technical and administrative backup support is provided to middle and top level managers in elected companies on a three to five year contracts had borne fruit.

The companies operating in the region and which are run by such managers had been able to weather the ongoing recession.

The skills transfer program in many parts of Africa had enabled such managers to position their firms to survive the harsh economic times, he added.

AMSCO also provides technical and administrative backup support for parastatals that are run efficiently though they are yet to have such a programme in Kenya, he added.

One of those corporations that they have worked with is the Namibia Wildlife Resorts which has turned around from a loss-making to a profit-making enterprise.

As more companies in the continent continue to partner with AMSCO for the program to bridge the skills gaps they have, Mr Andah said it would have the overall impact of making Africa competitive at all times.

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