SMES could be the bedrock of Kenya's economy

The world is being ravaged by tough economic times right now but the hardest hit are Small & Medium Enterprises (SMES) yet they are the ones driving the growth of every nation from the grassroots to the national levels through job creation, meeting the local demands for goods and services, as well as contributing to the country’s GDP.

Japheth’s Story

Japheth lost his job early this year. He was previously working as a team leader in one of the local manufacturing industries in Nairobi and on a good month he would take home a net salary of about Ksh120,000, enough money to take care of his bills and still be able to save a few notes for a rainy day. It is the savings that took him through the dark days of being unemployed.

Seeking Alternatives

When Japheth received the news that he was among the team that was getting laid off, he was prepared for it. Instead of wasting himself in self pity, he sought the counsel of his mentor who advised him to invest in a small business that would keep him busy as well as earn some money to sustain himself as he looked for another job opportunity elsewhere.

However, days passed by and weeks turned into months and there was no sign of getting another job. He started feeling frustrated because his savings were running dry and the business was barely surviving in its first months.

Japheth would open his small boutique and watch clients come in and out without anyone purchasing the commodities he was selling, not because his goods were highly priced or the business location was not ideal; on the contrary. He had the best unique merchandise as compared to other business owners in the neighbourhood, and the business location was in a prime location with great traffic flow of people.

He had done his market research well and he went all in and invested in the business knowing that he was on the right track. What Japheth hadn’t taken fully into consideration was that people are on a survival mode and life in this Kenya has become quite tough and even more challenging. People only spend on the bare minimum basic needs that they need to push through to another day.

Social Media Leverage For SMES

After two weeks of operation and the sales were slow, Japheth shared with his mentor who encouraged him to try moving the business online and reach out to his networks by sharing his products with them. This is when the orders started coming in. On a good day he would bank at least Ksh2,200 and go home smiling because his daughter would have her favourite cereals for breakfast in the following morning.

He thus became aggressive and decided to integrate new technology and leverage on his social media skills to reach out to more customers and in a few months time the business started making sense.

Unfortunately, some of the small and medium enterprises located in rural areas are not at an advantage to adopt and keep up with the rapid technology changes and this is why most investors will give up and close doors before their first year of business. In truth most businesses, especially if they are not fast moving goods and services, will need between 18-24 months to reach profitability.

Adapt And Survive

Japheth’s wife is a hairdresser who has been in business for the last ten years but just like her husband, the pandemic has not spared her from losing customers. She was operating a saloon and barber shop in Nairobi Central Business District.

Her business was thriving until she could not afford to pay rent for her saloon because most people started working from home and visits to the salon became unnecessary as everyone proposed to save on the little income they were earning. Consequently, Anne gave up on her shop and decided to operate as a mobile hairdresser which is gaining momentum.

Small and medium enterprise owners like Japheth and his wife Anne face a lot of challenges in this country as they try to make ends meet. If only there was a way to ease some of these constraints that pose a lot of threats to the growth of SMES, so that they are able to operate to their optimum level, then the informal sector in this country has a huge potential to restore our crippled economy as well as boost and transform our country’s GDP.

It is also important for business owners in this country to learn to find solutions to the challenges they face in their day-to-day business operations as opposed to giving up too soon on their investments.