The MSME sector plays a significant role in Kenya and contributes about 40% of the country’s GDP. This sector sustains millions of households and employs over 80% of the workforce, especially women and youth. It is therefore unfortunate that such a crucial player in our economy is also one of the most vulnerable to economic upheavals and other shocks like the Covid-19 pandemic which saw over 20% of small businesses fold.
After the pandemic, Kenyans took to their resilient nature to rebuild what was left of their businesses. One of the biggest challenges they faced was the lack of access to capital to stay afloat. Some financial institutions were alive to this challenge and sought to help like the European Investment Bank (EIB).
The EIB is one of the largest multilateral financial institutions in the world and offers a wide range of financial products for both the public and private sectors. On the private side, the EIB targets small and medium-sized entrepreneurs, through intermediaries like local banks.
There are many sterling examples of EIB’s impact on MSMEs, one of which we covered in our last article. Read the story of Ronald Omwenga here, on how the lender, through the Co-Operative Bank, uplifted his business with financing to purchase a truck to ease the transport of his products.
In this article, we will look at a few more examples of how EIB is making finance more accessible, putting businesses back on their feet after COVID-19, and ultimately improving the lives of entrepreneurs and their families.
Equity Afia
Equity Afia is an outpatient healthcare franchise that aims to bring quality healthcare services closer to communities at affordable rates. The clinics are distributed throughout many parts of the country depending on population, which determines the level of demand for medical services. Equity Afia clinics are independently owned and managed by local entrepreneurs like Dr. Anthony Kinyanjui, who runs a few Equity Afia Medical Centers in Nairobi’s Donholm area. In a clear testimony of the essence of EIB’s MSME empowerment program, many estates in Nairobi’s Eastlands area have an Equity Afia clinic as a result of timely financing during the COVID-19 pandemic from the lender in partnership with Equity Bank.
Equity Afia’s expansion has had profound ripple effects on individuals, community economies, and the national economy. The benefits of the healthcare chain are beyond social. Through job creation, Equity Afia is not only putting money directly into people’s pockets but also facilitating them to participate in nation-building through tax contributions.
Rapids Camp
One of the sectors that got worst hit by Covid-19 is tourism and outdoor recreation especially because of the movement restrictions that were a hallmark of the pandemic. Take Rapids Camp, for instance, an award-winning water recreation establishment that almost ground to a halt.
The camp majorly operates within Murang’a and Kirinyaga counties and one of the improvements they made with EIB funding was to build a bridge to ease movement across River Tana. This development saw an influx of visitors, many of whom had been locked out when the only option to cross the river was by boat. Since Rapids Camp built a bridge, the business has grown to a point where revenues have grown tremendously, and they have doubled staff members.
Animal World Feeds
Nancy Nyambura started her entrepreneurship journey back in 2002 with just one cow. As the business grew, she needed more animal feed, and like many others at her stage of business, she walked long distances to Nairobi’s Industrial Area to purchase some. Out of her lived experience, she saw a distribution gap and decided to bring feeds closer to her area of residence, Kayole.
In a case that is starkly different from the norm, COVID-19 brought a huge boom to her business because many other businesses closed down, leaving a clear path for her growth. If you remember well, for instance, disruption in education saw entrepreneurs turn classrooms into chicken coops as they branched into poultry farming.
As business boomed, Nancy struck a distribution deal with Unga Feeds, but she could not meet the financial commitments required without some help. Part of the requirements was a bank guarantee and trucks, and that is what got her into conversation with Co-operative Bank. She accessed an EIB loan that catapulted her venture.
Incentivizing women to access the credit market could lead to less risk in the financial system. The EIB’s Finance in Africa survey shows that loans to female-led firms perform better on average. This year, 53% (41% in 2022) of the sub-Saharan African banks surveyed report that women and women-led businesses have a lower non-performing loan rate. Source.
These are just a few examples of EIB’s input into MSMEs which are the lifeblood of African economies. Economic interventions are crucial for the successful operation of these businesses since they are more prone to shocks and crises like Covid 19.