If there is one reality that the world has had to embrace over the last two years, it is probably the fact that businesses must be ready to operate in an environment that is increasingly Volatile, Uncertain, Complex and Ambiguous – or VUCA.

The upheavals that came in the wake of the Covid-19 pandemic and more recently following the Russia-Ukraine war, have offered invaluable insights on this reality.

Over the last two months, I have had the unique opportunity of interacting closely with business owners – both here and abroad. In October, I travelled to Madrid, Spain where various exhibitors converged to showcase the best of the world’s value chain actors in the fruit industry.

The exhibitors ranged from leading exporting countries, global logistics companies, input and machinery providers, large exporters to upcoming players, especially from developing countries. Here, I got a first-hand feel of the various opportunities that Kenya’s fresh produce exporters are targeting in the international markets.  It is encouraging to note here that Kenya’s earnings from the export of fruits in 2021 remained stable amid the disruptions of Covid to stand at Sh18.4 billion, accounting for 11.7 per cent of horticultural export earnings.  Late that month into the early part of November, I also had a front-row opportunity to interact with owners of Small and Medium-sized Enterprises (SMEs) drawn from 9 counties in the Western, North Rift and Coastal regions.

Here, entrepreneurs under the auspices of the Kenya National Chamber of Commerce and Industry (KNCCI)  in partnership with Absa Bank and County Government officials shared their experiences of doing business in their respective counties.

Reflecting on the stories I heard from entrepreneurs both here and abroad, four things stood out as the key issues that face SMEs; access to finance, access to markets, access to information as well as access to mentorship and coaching. Access to finance remains one of the biggest perennial challenges facing SMEs worldwide.

The World Bank says about half of formal SMEs do not have access to formal credit. SMEs are less likely to be able to obtain bank loans than large firms. As a result, the International Finance Corporation (IFC) estimates that 40 per cent of formal micro, small and medium enterprises (MSMEs) in developing countries, have an unmet financing need of Sh634 trillion every year, which is equivalent to 1.4 times the current level of global MSME lending. The financing gap is even larger when micro and informal enterprises are taken into account.

That said, it is not enough for banks to provide liquidity to SMEs. It is also important to assist SMEs in accessing markets for their products and services. Though this may be achieved through lobby groups and associations that bring together SMEs, financial institutions can also play a powerful role in building confidence and trust among SMEs to play a more dominant role in the marketplace. This is what inspired the county engagement forums that Absa has held in partnership with KNCCI over the last two years which have so far provided over 10,000 entrepreneurs to network and market their solutions. Thirdly, the information asymmetry between buyers and sellers has been noted to be a hindrance to trade and could easily be termed as a non-tariff barrier to trade. I believe that commercial banks can help improve access to information to SMEs by providing networking platforms and events that connect traders with other actors in the marketplace. This can go a long way in not only easing access to markets but also enhancing the level of awareness that entrepreneurs have of their respective markets. Last but not least, access to mentorship and coaching is a critical need for entrepreneurs to scale up their businesses. This is particularly the case for entrepreneurs who need to know how to package and pitch their solutions. Mentorship and coaching can greatly help SMEs to build their capacity to do business both locally and internationally. This has been a key pillar of Absa’s support to SMEs by sharing business insights, networks, and expertise to transform their businesses.

It is clear from the foregoing that commercial banks are increasingly being called upon to go beyond finance to provide holistic solutions that meet the various unique needs of various SMEs.

It would be remiss of me not to commend the Government’s continued partnership with the private sector to address the needs of SMEs.

— The writer is the Business Banking Director at Absa Bank Kenya PLC