1st-Nov-2025 • Martin Mwangi • Financial Inclusion
Small and Medium Enterprises (SMEs) form the backbone of Kenyan economy, contributing significantly to GDP, employment, and innovation. However, their growth remains hindered by limited access to affordable and tailored financial services. This article explores strategies towards enhancing financial inclusion for SMEs in Kenya.
Financial inclusion refers to the effective delivery of appropriate financial services at affordable costs to all sectors of the society. For SMEs, this translates to having access to a wide range of financial products and services such as loans, savings accounts, insurance, and digital payments systems.
According to the World Bank, only 24% of adults in Kenya have an account at a formal financial institution. This statistic underscores the urgent need for improved financial inclusion strategies to cater to the needs of SMEs.
Lack of collateral: Traditional lending institutions often require substantial collateral, making it difficult for many SMEs to secure loans.
High interest rates: High-interest rates on loans can strain the cash flow and profitability of SMEs.
Limited digital literacy: A significant number of SME owners are not familiar with digital financial services, hindering their adoption.
Credit scoring models: These models assess the creditworthiness of borrowers using alternative data sources, making it easier for SMEs to access loans without collateral.
Digital financial services: Platforms like Lipabiz offer affordable and accessible digital payment solutions to SMEs, streamlining transactions and improving cash flow management.
Government initiatives: The Kenyan government has launched various programs aimed at promoting financial inclusion for SMEs, such as the Digital Lending Programme which provides affordable loans to SMEs through digital channels.
As we strive towards an inclusive and prosperous business landscape in Kenya, it is essential that we continue to innovate, collaborate, and advocate for policies and solutions that cater to the unique needs of SMEs. By doing so, we empower these businesses to grow, create jobs, and contribute to Kenya's economic growth.