The role of multi-stakeholder partnerships in transforming SMEs

SMEs transformation endeavours:

By Elizabeth Wasunna-Ochwa, Business Banking Director, Absa Bank Kenya

Stakeholder outreach to small businesses (most of them small & medium enterprises—SMEs), regulators, lobby groups, and financial partners has unveiled significant opportunities for enhancing the resilience and sustainability of the SMEs during challenging economic times. By engaging in collaborative business caucuses, these small players are able to tap into expert advice, share effective coping strategies, and forge meaningful connections that can pave way to transformative outcomes for their businesses.

The challenges facing SMEs in recent years have been immense, heightened by external factors such as high inflation rates and increased interest rates, which have severely constrained cash flow and dampened overall sales. These economic pressures have put significant strain on many small businesses, pushing some to the brink of closure and threatening their long-term viability.

Significantly, SMEs are vital to Kenya’s economy, driving job creation and strengthening community welfare. Globally, over 90 per cent of businesses are SMEs, and they account for more than half of all jobs. In the  Kenyan situation, this sector employs over 15 million people and contributes around 30 per cent of the GDP, according to the Kenya Bankers Association’s (KBA)  2021 Micro, Small, and Medium Enterprises (MSMEs) Survey Report. Given their significant impact, it is crucial to implement targeted support measures to bolster SMEs and help them thrive, even in challenging times.

Considering the vital role SMEs play, financial institutions have a responsibility to innovate and adapt their services to ensure the sustainability of these businesses during tough times. This adaptation involves forging deeper relationships with SMEs that extend beyond transactional interactions, transforming them into meaningful partnerships. Since the onset of the Covid-19 pandemic, banks have established robust support systems for small businesses, encompassing efforts such as restructuring loan facilities, providing critical cash flow support, and assisting with the development and execution of turnaround strategies.

Given that SMEs are the heartbeat of our communities, it is essential for financial institutions to evolve alongside the businesses, especially in challenging times. Rather than simply processing transactions, banks should now forge genuine partnerships with small businesses. Since the onset of the Covid-19 pandemic, banks have stepped up by restructuring loan facilities, providing crucial cash flow support, and collaborating on turnaround strategies to ensure that SMEs not only survive but also thrive. Yet, further progress can be achieved by expanding capacity-building programs to equip SME owners with the skills needed for long-term success.

A prime example of this commitment is Absa Bank Kenya’s “Wezesha Caravan,” an empowerment initiative designed to connect with customers and business leaders across the country. The Caravan hosts town hall style meetings across key counties such as Eldoret, Nakuru, Mombasa, Nyeri, and Kisumu, providing a dynamic forum where business owners can exchange ideas, and network, and also gain valuable insights from industry experts. The initiative is implemented in collaboration with the Kenya National Chamber of Commerce and Industry (KNCCI) and aims to form cohesive business clubs that foster a sense of community among SMEs.

In my view, transforming SMEs into resilient, sustainable enterprises depends on strong partnerships between government and the private sector. Such collaborations can spark progress and innovation. Notably, government agencies are essential since they provide regulatory oversight, craft supportive policies, and mobilise vital resources. Equally, private sector players, especially financial institutions, play a critical role by delivering innovative solutions, offering mentorship, and expanding market access. Together, these partnerships create a comprehensive ecosystem that empowers SME growth.

Over the years, as part of our ongoing commitment to SME empowerment, Absa Bank has periodically leveraged the “Wezesha Caravan” to collaborate with local (county) governments and business associations. In such tailored financial training sessions, the bank has consistently brought together industry experts and key stakeholders to deliver critical insights and practical strategies, enabling entrepreneurs to navigate economic volatility. By addressing fundamental challenges such as liquidity constraints and market access, these engagements have not only strengthened SMEs’ resilience but also fostered an ecosystem where business leaders are empowered to drive sustainable growth.

As we strive to achieve the milestones set out in Kenya’s Vision 2030 this year, it is imperative that empowering SMEs remains a fundamental priority. Without doubt, the government’s proactive role in establishing a favourable environment through strategic policy frameworks, infrastructure development, and capacity-building initiatives is and remains critical. Moreover, the private sector must continue to innovate, offering cutting-edge solutions to stimulate entrepreneurship and drive SME growth.

Notably, Absa Bank’s commitment to SMEs transcends traditional financial support. As we strategically pivot to strengthen our SME proposition, we offer a suite of both–financial and non-financial solutions and which include coaching, mentorship, market linkages, and sustainable financing tailored to key sectors such as health, manufacturing, and natural resource management.

On our part as financial sector leaders, we must drive greater investment in the SME sector. The future of our economy hinges on the resilience and innovation of these enterprises, which require far more than traditional financial support. It is time to broaden our perspective and adopt a more holistic approach, integrating comprehensive solutions such as coaching, mentorship, market linkages, and sustainable financing, especially in critical sectors mentioned in the preceding paragraph.

Our collective experience shows that when SMEs are equipped with tailored, non-financial tools alongside capital, they are better positioned to navigate today’s complex challenges and drive impact. I call upon my peers in the industry to redefine support for SMEs, embrace a holistic strategy, and work together to empower these vital engines of innovation. The opportunity to shape a more resilient and prosperous future is in our hands, and our commitment today will determine the success of the businesses that power tomorrow.

The Absa Bank’s “Wezesha Caravans” model has proven that strategic collaborations are pertinent for unlocking the SME sector potential. By fostering multi-stakeholder partnerships, we pave the way for growth, resilience, and a future-proof economy. When SMEs thrive, they fuel innovation, strengthen communities, and drive economic progress, ensuring a more prosperous future for all.

The author is the Business Banking Director, Absa Bank Kenya PLC. {Ends}