Small and Medium Enterprises (SMEs) form the backbone of Kenya’s economy, contributing significantly to its GDP. However, accessing adequate financing remains a challenge that hampers their growth potential. Financial inclusion – the delivery of quality financial services at affordable costs to sections of disadvantaged and low-income segments - can be a game-changer for SMEs in Kenya.

According to the World Bank, only 14% of adult Kenyans have formal bank accounts. This translates to a significant portion of SMEs being excluded from traditional banking services. This gap is where digital financial solutions come into play, bridging the divide and unlocking opportunities for growth.

Digital platforms such as Lipabiz offer a cost-effective solution that caters specifically to SMEs. The platform provides a range of financial services including invoicing, payments, loans, and savings, all under one roof. This integration streamlines financial operations and reduces the dependency on multiple service providers.

Case Study: M-Shwari

M-Shwari, a mobile-based banking platform by Safaricom and Commercial Bank of Africa (CBA), is one such success story. Launched in 2012, the service has over 29 million subscribers, serving millions of Kenyans who were previously unbanked or underbanked. By offering loans, savings, and deposits through mobile money, M-Shwari has democratized financial services, providing a lifeline for many SMEs.

Data Insights

The Central Bank of Kenya reports that the number of mobile money accounts in Kenya has grown from 17.8 million in 2010 to 44.6 million in 2020. This growth underscores the potential of digital financial solutions for expanding financial inclusion and empowering SMEs.

Recommendations

• Adopt digital financial platforms to streamline operations, reduce costs, and access a wider range of services.
• Participate in government-led initiatives such as the National Integrated Identity Management System (NIIMS) to gain access to formal banking services and credit facilities.
• Collaborate with other SMEs to pool resources, negotiate better terms with service providers, and leverage collective buying power for mutual benefit.