New SME Funding Opportunities in Kenya
Kenya’s Uwezo Fund has been one of the main sources of funding for SMEs run by young people in the country in recent years. This fund is part of the Vision 2030 programme working to empower youth, women, and persons with disabilities.
However, in Nyeri County, young people are finding new funding opportunities outside of the Uwezo fund, according to a recent survey. Saccos and corporations are popular options.
These young people cite a variety of benefits to choosing these alternative funding mechanisms. For example, there is no minimum loan amount and the application process is easier. For Peter Muraguri, for example, the Uwezo programme application process simply took too long, and he chose to apply for funding through a Sacco instead.
The minimum requirements are also difficult to meet, something Ms. Agnes Mugawi, the chairwoman of the Uwezo Fund committee, notes makes things more difficult for some. Many young people only require loans of Sh5,000 according to Taifa Sacco research and development officer James Macharia, much less than the Sh50,000 Uwezo Fund minimum.
Uwezo’s loans are interest free, but these other institutions usually offer 1% interest rates, alongside business guidance. This advice and mentorship is one of the key reasons for the switch in funding bodies among young people. According to Faith Munyiri, who works for Dynamic Young Enterprise in Nyeri Town, notes that, particularly in the case of larger loans, entrepreneurs need continuous financial advice.
“This country possesses youths with brilliant ideas in the fields of entrepreneurship and ICT and that is why local corporates are coming in to support these ideas,” Mr. Macharia says. Given the number of bright, young entrepreneurs in the country, there is a clear need to further expand funding opportunities for young entrepreneurs in addition to the Uwezo model, to ensure that they can be successful in starting and growing their businesses.
Source: Nicholas Komu, The Nation, Distributed by AllAfrica Global Media