Kenya’s largest telco, Safaricom, is offering training and financial support of between Sh5,000 and Sh10,000 to small businesses through its foundation.
In doing so, it seeks to offer guidance to the businesses in improving their saving and business investments as 2016 statistics by the Kenya National Bureau of Standards (KNBS) show that the main reason for closure of businesses in the country is shortage of operating funds.
Additionally, the KNBS study found that increased operating expenses, declining income and losses incurred by the businesses as well as diversion of returns and operating capital to other activities led to the closure of businesses.
However, Safaricom will invest Sh35 million in the first year of the strategy towards the initiative, in which it will work with its implementing partner Hand in Hand East Africa (HiH EA) to execute a microloan fund programme called the Key 2 Empowerment targeting youth and women.
HiH EA is a non-governmental organisation that is premised on the need to create sustainable income generating activities. Through it Safaricom has implemented its economic empowerment projects in five areas: Homa Bay, Busia, Bomet, Embu, Emali and Oloitoktok.
The telco has so far disbursed enterprise incubation funds to 572 HiH EA members as at 20 June 2018. “For SMEs to qualify for the loan they are expected to attend HiH EA training which lasts nine months and are to participate in the group table banking for six months.
“They should also save Sh200 per month for at least four months. This ensures that they have inculcated a saving culture and will be able to properly invest the money as well as repay the loan,” said Sanda Ojiambo, Head of Corporate Responsibility at Safaricom.
The training will comprise six diverse modules which cater to the different industries. They will include group mobilisation and formation, savings and resource mobilisation, enterprise development, financial management, access to credit value addition and market linkage as well as climate change resilience. The modules have proved to be useful to SMEs.
For instance, in 2015, Jackline Ndiku, a mother of three who resides in Kathatu Village, Makueni County, joined HiH EA with Ndyaaulwa Ni Mwaitu Group, a self-help group comprising 26 members.
At the time her shoe repair business was going through financial difficulties.
While at the training, Ms Ndiku was forced to close it down as constraints mounted. However, she learnt the importance of financial planning and savings as well as how to create, expand and manage an enterprise.
By the end of the training the group was introduced to the Enterprise Incubation Fund (EIF) where she was given a Sh10,000 loan, which she used to restart her shoe repair business. Today it is a thriving business. Initially, the business generated a profit of Sh1,000 a month but now she makes about Sh3,000.
“We understand that every area is unique, this is why we encourage our members to identify a market gap in their locality and start a business to cater for that particular need or to create businesses using available resources. Our members run enterprises in diverse industries including agribusiness, small-scale manufacturing and small commercial enterprises,” said Ojiambo.
The members are required to repay the loan on a monthly basis for a minimum of three months and a maximum of 12 months. Business relation officers work hand in hand with the members to ensure that the loan accessed is used to develop their enterprises.
To enrol in the programme, an entrepreneur can visit the HiH EA offices located in various parts of the country including Nairobi, Kitui, Nakuru, Bungoma and Eldoret. They have to be members of a self-help group as fellow members will act as guarantors of loans.