Kenyan SMEs frustrated

March 24, 2010

, NAIROBI, Kenya, Mar 24 – A new survey shows that Small and Medium Enterprises (SMEs) are dissatisfied with the business environment in the country.

The survey released by Strategic Public Relations and Research shows that 58 percent of 2,035 businesses surveyed feel the environment is not favourable for growth and is only good enough for basic survival.

The firm’s Chief Executive Ceaser Handa said most small-scale companies still face challenges such as highly priced inputs, high cost of business and stiff competition from larger companies.

“It is generally acknowledged the SME sector faces a myriad of challenges that affect their growth and profitability,” he said adding it weakens their ability to contribute to sustainable development.

Availability of credit remains a daunting challenge with most business expressing their dissatisfaction with financial institutions in making credit available to do business.

Lack of information on where to access professional and financial services was a major impediment for growth, among those questioned.

Despite availability of products offered by financial and microfinance institutions, the targeted recipients were not informed on where to get them and how to meet requirements.

When asked whether bigger businesses should come to the aid of smaller businesses, 71 percent agreed, while 29 percent did not think so. They however said the assistance should come in form of provision of capital and loans to small enterprises as well as access to credit facilities and training.

Mr Handa said representation by national organs has also been a major challenge for small businesses. The report shows that 75 percent were not represented by any national body through a Membership of Association (MOA) group.

“We found that SMEs are poorly organised to effectively push for their challenges to be addressed at a national level,” Mr Handa said.

Political instability also emerged as a major deterrent to the growth of the SME sector. Following the post election violence of 2007-2008, many businesses shut down completely, while others were struggling to remain afloat.

Sixty percent of those surveyed said they feared a reoccurrence of the post election violence in 2012, with 27 percent of them expressing concerns the government was not doing enough to prevent such an outcome.

“According to them, elections equal violence. If we are to grow economically, the government needs to reassure these small businesses that political stability is here to stay,” he said.

Also speaking during the release of the survey, Danish ambassador to Kenya Bo Jensen said while the government had taken great strides to improve the infrastructure and general business environment, it needed to do more on addressing the country’s political stability.


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