January 26, 2022

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Timely – Precise – Factual

TechnoServe: Avail Lending Solutions Suitable for Micro-Reatailers

By Oduor Jack

Lack of proper inventory records and low level of entrepreneurial education is hampering access to finance for micro retailers in Kenya.

This comes even as it emerged that only 10 percent of local micro retailers have ever undergone some form of entrepreneurial training on managing their businesses.

According to Alice Waweru the entrepreneurship portfolio lead at TechnoServe, financial institutions don’t reach out to the micro retail businesses to understand how they operate and their financial needs.

Speaking during a Micro-Retail Stakeholder Forum held in Nairobi, Waweru pointed out that growth in online presence by micro-retailers presents a golden opportunity for players in the digital economy to avail records that are visible enough for financial institutions to develop an appropriate credit rating for them.

“We are calling upon the financial institutions to tailor financial products that are suitable and appropriate for our micro retailers. We realised there are a lot of financial products targeting SMEs but most of them are not appropriate for a duka owner” said Ms. Waweru

Techno Serve has been championing for the Smart Duka initiative which begun in 2015, by training in Management Skills and fostering business support to these retailers.

From the forum themed “Spotlighting opportunities in the continuously evolving Micro-Retail sector” it emerged that the Smart Duka initiative, has reached over 40,000 retailers in Nairobi with a funding of over Ksh500 million over the five years.

With micro-retailers increasingly using online platforms to access credit, suppliers and sell goods, Techno Serve noted that it was targeting to reach over 250,000 retail businesses in the next 4 years

In Kenya more than a million young people leave high school every year and only 25% are absorbed into the institutions of higher learning leaving the rest to be absorbed in the micro enterprise space

“We are urging players in the educational scene to make the business education more practical so that when a student leaves high school he can easily start a small enterprise and grow it to the next level,” Added Waweru

A study conducted by the Technology Firm found out that while 41 percent of micro-retailers that used these linkages in addition to capacity building done by the organisation saw a drop in revenues, this is lower than the 93 percent drop on a similar study conducted by the World Bank.

The study further noted that Micro-retailers that were formalized and used digital products were able to better access finance, technology, and supply chains which increased their sustainability.

“Digital financial providers have leveraged on digital innovations to reach out to micro retailers and offer mobile based loans whose credit score ratings are dependent on number and amount of transactions. This has accorded many micro retailers an opportunity to access credit which they otherwise wouldn’t access due to the informal nature of businesses,” she added.

Since 2015, Techno Serve has worked with over 50,000 Micro Retailers located in Kenya, Tanzania, Nigeria and Cote d’Ivoire to improve their business management skills and provide links to finance and markets.

Next year we mapped out new areas Tana River, Lamu, Kwale, Machakos Kilifi and Mombasa as the next frontier.

The Forum sought to spur conversations that can unlock the future potential of the micro enterprise sector in Kenya.