The fact that the Small and Medium Enterprises (SMEs) are an important aspect of our economy cannot be understated. This is because this sector is the largest employer in the country, employing over 15 Million with one 7 in every 10 people being employed by SME’s. The sector is also projected to contribute 50 per cent of GDP in the next three years.
Despite this being a key sector in the economy, Kenyan SMEs have had their fair share of challenges which include inadequate education, inadequate business and management skills, insufficient working capital, lack of access to credit among others.
Since inception, Equity Bank has been at the forefront of supporting SME’s in the Kenyan market to grow to the next level. This can be seen in the fact that their loan book has largely focused on SME lending. As a matter of fact, as far back as 2011, SME’s were responsible for 40% of Equity Bank’s interest income, 90% of income from trade finance and 90% of income from foreign exchange transactions.
So important are SME’s to the bank that they were included in the banks’ Africa Recovery and Resilience Plan under Pillar Four. The thinking behind this ambitious plan is to turn around the fortunes of the continent through well-coordinated efforts and investment towards industrialization and market creation within the continent.
Under Pillar Four which deals with SMEs, the bank intends to empower millions of MSMEs who will in turn grow their businesses and create jobs. The bank’s plan is to empower 5 million MSMEs, with a projection that each of these will create 5 direct jobs and 5 indirect ones. That is a total of 50 Million jobs created in African economies which will have a significant impact on the economic growth of these countries.
The bank has been achieving this by offering SMEs mentorship, leadership development, capacity building, networking opportunities and also appropriate pricing of loans so as to make them affordable.
One of the programs that Equity has been utilizing to achieve this is the Young Africa Works which is a partnership with the Mastercard Foundation. The program works by providing young people with training on entrepreneurship skills which prepares them to access finance to start and grow their businesses. So far, beneficiaries of the program that began in 2019 have created over 1.2 million jobs to date and the number is expected to grow to 2 million jobs by the end of the first phase of the initiative in 2024.
One of the beneficiaries of YAW, is Mary Odera a spare parts shop owner. Prior to joining the program her business was not doing so well. However, after she was enrolled, she was able to learn about marketing, costing, record keeping among others. This training helped her get her business in order to a point where she was able to access loans for expansion. Through the training she was able to become an Equity agent which has enabled her to diversify her income.
Harrison Kamau a retail shop owner is another beneficiary of the financial literacy program. Kamau started out with a kiosk which was also his house but has managed to grow this into three shops in Kayole, Utawala and Gitugi. Before he joined the program, he did not know how to budget and ended up using funds from the business for personal expenses. However, after getting trained, he was able to start budgeting, keeping records and saving. This enabled him to start getting loans to expand his business. He started off with a Ksh. 20,000 loan but has grown to being able to get a Ksh. 1 Million loan which he used to invest in a wholesale business and also buy a car.
Lawrence Kyalo is an agrovet owner in Kajiado town, who has pulled himself up with his bootstraps. He started out with a small outfit in the town and during his banking at Equity he got to find out about the YAW training. During the training, he was able to learn about planning and budgeting. This enabled him to improve his business to a point he was able to get his first loan of Ksh. 200,000 for expansion. His hard work saw him pay off this loan within no time and he took another one for Ksh. 900,000 which enabled him buy more stock for his business. A further Ksh. 900,000 loan saw him open another outlet in Isinya town which is also successful.
A common factor in all these SME stories is hardworking Kenyans who did not have the know how and resources needed to take them to the next level. With the financial training and promotion of credit to SMEs, Equity Bank has enabled the sector to grow to a point that it is a major contributor to our economy.
So far, over 2.3 youth and women have received financial literacy training and 344,326 MSMEs receiving entrepreneurship training. With Ksh. 154.7 Billion loans being disbursed to these individuals and businesses.