PHOTO | DENNIS ONSONGO
Kenyan SMEs experienced an average mortality rate of 75 percent within the first three years of inception (KNBS 2016), with the Covid-19 throwing a spanner in the works, most likely increasing the mortality rate to 75 percent by end of June, 2020, according to a statement by the Central Bank of Kenya Governor.
Despite the Government’s modest efforts of backstopping SMEs through a series of stimuli intervention such as establishment of a credit guarantee scheme, reduction of bank cash reserve ratio, tax breaks, gazetting items to be supplied by SMEs and Buy Kenya Build Kenya promotion by purchasing locally assembled vehicles among others, there is a high probability of not effectively addressing SMEs.
Buy Kenya Build Kenya must be anchored on current SME manufactured products in current clusters of Kariobangi Light Industries, Kariokor Leather market, Uhuru textile market, Jogoo-Ngong Road furniture markets, of course with much needed support such as equipment upgrade, upskilling, standardisation and financing support.
The first strategy SMEs regardless of sector or size and cognizant of significantly low revenue combined with little to no working capital, changing market dynamics and cost management challenges; is business consolidation through mergers.
SMEs in the same sector can combine their businesses to help them overcome these challenges by riding on the synergy of the combined business.
