Helping Businesses Grow in Kenya

Small businesses are the growth engines of the world’s economies.

In Africa, smaller businesses employ the bulk of the working population, making a sizable contribution to poverty reduction and economic growth across the continent. 

IFC, recognizing the social and economic importance of smaller businesses and the unique challenges they face, has launched a number of programs that help African businessmen and women acquire the skills and financing they need to succeed. 

A key component of IFC’s support for small and medium sized enterprises (SMEs) in Africa is the IFC SME Solutions Centers, which promote access to finance for SMEs complemented by specific capacity building services. 

The SME Solutions Centers deliver an integrated package of small business-focused services under one roof. They support SMEs at different stages of business development to enable them to improve their business processes, human resources, structures, and products and services.

As part of this process, participating enterprises graduate to a point where they are able to access finance through the SME Solutions Centers and, ultimately, from existing traditional financial institutions.
 

In Kenya, the SME Solutions Centers have made a significant impact on the growth of smaller businesses and have helped nurture a spirit of entrepreneurship, achieving the following developmental results:

• • 59 deals for US $12.05m overall total
  • Over 30 SMEs directly receiving advisory support
  • Over 400 jobs created and over 700 jobs sustained
  • Over 6000 SME’s trained in various areas
  • Over 300 consultants and trainers trained
  • 27 start-up MSE’s incubated

The following three profiles feature Kenyan businesses that have expanded, reached new markets, and developed new products thanks to IFC’s SME Solutions Centers.

IFC’s SME Solutions Center's business incubation service has made it possible for ‘Go Creations’, a young, dynamic graphic design business, to flourish.

Before joining the SME Solutions Centre incubation scheme, Go Creations was a one man, home-based business that specialized in children’s interior decorating and designing birthday cards and t-shirts.

The company has since more than doubled its turn-over, employs six people, and offers a wider range of services, including corporate brand management, copyrighting, animation, logo and web design.

‘We used to have a myopic outlook on our business, but being here at the SSC has totally opened our minds.’ said William Mushivochi, a co-founder of Go Creations. ‘The SSC offices and conference facilities have helped us project a highly professional image to our clients. We know that this has directly resulted in us bagging new contracts.’

Business Enabling Environment

The SSC Program’s business incubation is designed to increase the success rate of start-up companies by providing fully-equipped office space and hands-on professional training and mentorship.

The SSC Program delivers training in book keeping, business development, legal issues, human resource management, and marketing. Businesses are also able to request further training or professional advice from in-house mentors.

Benjamin Lutta, co-founder of Go Creations said, “The first thing we learned was that if you can’t read the numbers in your business then you can never move ahead. The in-house trainers have been invaluable and the training style is very open.”

When food and beverage company Promasidor offered to sell their profitable “Top Dog” branded dog food production line to in-house managers in 2007, plant manager John Kinuthia saw his chance to get into business for himself.

“I had been working in production, mainly in the food industry for the last 39 years, so I knew it was possible to take over the business. I was just not sure where to get the money,” he said.

Seeking help to launch his new business, Mr Kinuthia approached IFC’s SME Solutions Centre (SSC) in Kenya. The Centre offers access to finance and management advice for fledgling businesses, which often face difficulty accessing finance from local banks.

With total faith in the Top-Dog brand, John Kinuthia formed a partnership with a colleague and together they created a business plan for ‘Heritage Foods Co Ltd’.

When they approached local banks, however, their loan requests were either rejected due to insufficient collateral, or they found the terms too rigid.

'A Miracle'

John’s fortunes changed when he saw a local newspaper advert placed by IFC’s SSC offering SME’s loans of between US$50,000 and $500,000.

‘It was like a miracle,” he said. “I waited until 8am, picked up the phone, called the SSC and introduced myself saying “I want to come and see you’.”

The SSC team recognized Heritage Foods’ potential and offered John and his partner expert assistance to improve their business plan before submitting it to BPI, the in-house fund manager.

BPI’s five-year management buy-out facility was structured to offer more favorable terms relative to the banks’, and also an additional interest-free loan to pay for Heritage Foods’ technical assistance requirements.

The technical assistance loan allowed Heritage Foods to buy office equipment, and also pay for valuable management and governance training, website development. and an efficient accounting system.

Since the management buy-out, Heritage Foods has gone from strength to strength. Their ‘Top Dog’ and ‘Krunshi’ brands today command about 70 percent of the market and Mr Kinuthia plans to build on this success by taking over management of the company’s distribution network.

Thanks to advisory support offered by IFC’s SME Solutions Centre (SSC) in Kenya, Mohazo Ex-Impo Ltd, a wholesale supplier of handicrafts, has become an internationally-recognized brand.

Zohra Baraka founded the company in 1987. In 2007, she sought help from IFC’s SME Solutions Centre to grown her business. At that time, she exported some of her unique handicrafts, but the bulk was sold to local hotel chains, or from her gallery in downtown Nairobi.

“When I first approached the SSC, they advised me to focus on properly branding the business so that we could be well positioned to attract reputable customers and repeat orders once everything was in place,” Zohra said.

Over the past two years, IFC’s SME Solutions Centre has supported Zohra’s access to capacity building and technical advice. IFC also supported Zohra’s efforts to build a company website.

In addition, by linking Zohra with local consultants, the SSC has enabled Mohazo Ltd gain access to advisory services in strategic planning, sales and marketing and the ISO 9001/2008 business quality management certification.

The ISO certification was recommended by the SSC so that Mohazo Ltd could gain wider recognition as a quality producer and compete more effectively with international companies who might also be ISO certified.

Award Winning Business Plan

Zohar’s new skills in business planning and strategy development were rewarded when she won first place in the National Business Plan Competition (dubbed Jitihada Kenya – 2009).

Zohar triumphed over more than 2,000 SME entrants country-wide and scooped a prize of $15,000. The competition and prize money were sponsored by the Co-operative Bank of Kenya.

“It was certainly the business management skills acquired, the re-branding of our business and the ISO certification that gave us the edge in the Jitihada competition,” she said. “No other entrant had quite this combination of systems and processes in the entire field of competitors. We owe IFC’s SSC a great measure of gratitude for supporting us to achieve these heights.”

Sustainable growth

Thanks to the skills she acquired with IFC’s support, Zohra is making further improvements to her business. She recently employed consultants to work on website optimization (finding ways to increase traffic to her website) for http://www.mohazo.co.ke and has created an in-house call center that serves clients from Asia, Europe and the U.S.

Major US based chains such as TJ Maxx and Target will also now be able to place their orders ‘locally’ through the recently registered subsidiary - Mohazo USA Inc.

For more information contact:
Jason Hopps
Communications Officer
Johannesburg, South Africa
Phone: +27 11 731 3120
E-mail: jhopps@ifc.org