Small and medium-sized enterprises (SMEs) in Kenya are being urged to seek flexible financing options to support their sustainable growth. Pauline Kamara, Chief Executive Officer and Founder of Apiculture Ventures Limited, highlighted the need for affordable, accessible, and flexible financing to address one of the biggest challenges facing SMEs: access to finance. According to Kamara, financing arrangements should take into account the operational realities and cash-flow cycles of businesses. This call was made during a SME Breakfast Meeting organized by Centafrique Limited in Nairobi.
Kamara emphasized that entrepreneurs should focus not only on achieving success but also on maintaining constant growth, which requires access to appropriate financial resources. She noted that financing can be affordable but still fail to meet an SME's needs if it is difficult to access or does not offer sufficient flexibility. Kamara cited beekeeping, a season-based business, as an example of an enterprise whose income and activities can fluctuate depending on the season. This highlights the need for financial institutions to consider the nature of businesses when designing financing products.
Flexible financing enables entrepreneurs to plan their finances according to their business cycles, Kamara said. She urged financial institutions and other financiers to understand the seasonal nature of businesses when structuring financing arrangements. This, she believes, will help SMEs plan their finances and grow their businesses sustainably. Kamara also cautioned entrepreneurs against viewing access to a loan as an end in itself, emphasizing the need for SMEs to develop the capacity to manage and deploy borrowed funds effectively.
To effectively manage finances, Kamara advised businesses to clearly define the purpose of financing before applying for funds. This includes identifying whether the funds are for equipment, capacity building, research and development, working capital, or expansion. She also stressed the importance of using funds for the purposes for which they were secured. According to Kamara, poor financial management can undermine an otherwise profitable business, making financial knowledge an important component of SME growth.
Kamara encouraged entrepreneurs to continuously acquire knowledge on financial management, expenditure, bookkeeping, and reinvestment. She emphasized that knowledge is crucial for SMEs to grow sustainably. Kamara also advised SMEs to establish relationships with partners who can provide technical and financial advisory support, as entrepreneurs cannot be expected to have expertise in every aspect of running a business.
Apiculture Ventures' engagement with partners, including Centafrique, is an example of how advisory support can help entrepreneurs make better financing decisions. Such partnerships can help SMEs determine how much financing they require, what it should be used for, and how it should be managed after disbursement. This, Kamara believes, will contribute to the growth of SMEs. Her remarks come as Centafrique Limited intensifies efforts to strengthen links between SMEs and financial institutions.
Centafrique Limited continues to provide business strategy, financial advisory, fundraising, management consulting, and research services to SMEs to promote sustainable growth, economic empowerment, and business transformation across the private and public sectors. By offering these services, the consultancy firm aims to improve the preparedness and understanding of financing options among entrepreneurs before seeking capital. This support is expected to enable SMEs to access the right financing and achieve sustainable growth.
Key points
- Pauline Kamara emphasizes the need for affordable, accessible, and flexible financing for SMEs in Kenya.
- Flexible financing enables entrepreneurs to plan their finances according to their business cycles.
- SMEs need to develop the capacity to manage and deploy borrowed funds effectively.
