Absa’s Sh100 billion war chest to power Kenya’s SME growth and resilience

Absa Bank Kenya has announced a commitment of Kes100 billion to support the growth of Kenya’s Micro, Small, and Medium Enterprises (MSMEs), a move expected to create more job opportunities in a sector employing over 80 percent of Kenya’s workforce.

This funding comes at a time when Kenya’s MSMEs are contending with a challenging operating environment marked by high inflation, increasing interest rates, the impact of the Russia-Ukraine war, and elevated taxation as per the Finance Act of 2023, among other factors.

Absa asserts that this multi-billion-shilling investment will play a pivotal role in driving the growth of MSMEs across various value chains in Kenya over the next three years.

The financial support will bolster the sector’s resilience by providing easily accessible working capital, thereby solidifying Absa’s significant role in catalyzing Kenya’s economic growth and development.

MSME contribution to Kenya economy

Absa Kenya’s CEO, Abdi Mohamed, made this announcement during the Bank’s Annual Business Club Forum. He underlined the lender’s dedication to nurturing and supporting the growth of Kenya’s dynamic and pivotal MSME industry.

“As a Bank, we are fully cognizant of the immense contribution that MSMEs make to Kenya’s economy through job creation and their contribution to the Gross Domestic Product (GDP),” Abdi explained.

By offering substantial financial support to MSMEs, Absa is establishing itself as a catalyst for driving positive economic transformation in the region.

The availability of this funding line is anticipated to tackle one of the key challenges encountered by MSMEs in the country, namely, the accessibility of working capital. This support is set to streamline business operations, facilitate expansion, and generate employment opportunities, thereby making a valuable contribution to Kenya’s overall economic development.

“The support we are committing today aims to ensure that MSMEs have ready access to capital that enhances their resilience,” said Abdi, adding, “We see innovation, commitment, and ability to find solutions in the MSME sector. This inspires us a bank.”

The Kes100 billion commitment is not limited to a single sector; instead, it spans various value chains and ecosystems, ensuring that a wide spectrum of MSMEs can benefit. Absa’s approach seeks to empower MSMEs, from budding startups to established enterprises, fostering innovation and driving economic growth in Kenya.

“Furthermore, the commitment we have made today complements our four-pronged approach for our SME customers, which includes access to markets, access to information, access to mentorship and coaching, and access to sustainable finance. This commitment also aligns with our broader strategy to contribute to the nation’s economic development by enabling enterprises to thrive,” Abdi added.

Read also: Absa’s Wezesha Stock offers SMEs up to Sh10 million in loans

Conducive environment for MSMEs growth

With the latest move, Absa is positioning itself as a vital partner for Kenya’s MSME sector, playing a crucial role in the country’s growth story and demonstrating a long-term commitment to the success and resilience of Kenyan businesses.

Over the past 12 months, Absa has allocated more than Kes30 billion to the MSME sector. Additionally, the Pan-African financial institution has provided training to over 20,000 individuals, equipping them with best business practices. This initiative has also included organizing overseas benchmarking trips for entrepreneurs to gain insights from diverse business environments and explore expansion opportunities.

Speaking on behalf of Simon Chelugui, the Cabinet Secretary for the Ministry of Cooperatives and MSMEs Development, Henry Rithaa, the Director-General of the Micro and Small Enterprises Authority, addressed Absa Business Club members. Rithaa highlighted that the ministry has launched several initiatives aimed at creating an environment conducive to the growth and the full realization of the potential of MSMEs.

“One of the key targets the Ministry is revitalizing priority value chains that create impact,  reduce wastage and duplication in our economy,” Mr Rithaa said.

Highlighting these priority value chains, Rithaa singled out leather, cotton, dairy, edible oils, tea, rice, the blue economy, minerals, forestry, and building materials investment segments. He noted that the government is positioning these sectors as anchors of economic revival that will give rise to job opportunities, especially among Kenya’s youth.

Abdi noted that the Kes100 funding will bring about transformative change within the MSME landscape, underlining Absa’s role as a leading financial partner in Kenya’s journey toward sustainable growth and development.

Brittle, Anxious, Non-linear, and Incomprehensible

Absa’s Annual Business Club Forum was organized to explore opportunities for MSMEs to thrive amidst the prevailing challenging operating environment that has been dubbed Brittle, Anxious, Non-linear, and Incomprehensible (BANI).

“As we navigate through these uncertain times, we must not only adapt but also embrace these changes and seize the opportunities that come with them,” noted Abdi.

Early this week, Absa unveiled “Wezesha Stock” a new offering targeting MSMEs that provides a faster option for investors to replenish stocks at the click of a button. Data shows that MSMEs in Kenya provide jobs to roughly 15 million out of the country’s 18 million workforce.

At a panel discussion on how MSME business owners can navigate a BANI trading environment, the Kenya National Chamber of Commerce and Industry National Director Lucy Muchoki encouraged the entrepreneurs to enhance networking in order to identify and harness new investment opportunities within their industries of choice.

Phylis Mwangi, who is the CEO International Trade Center singled out investments in specialty teas and coffee, fashion and the creative industry as well as consulting as some of the avenues MSME owners can explore to invest and scale.

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