How skills training, mentorship are helping unlock SMEs potential

While access to finance is seen as the major challenge that many local small and medium enterprises (SMEs) face, the problem is usually coupled with limited technical know-how and mentorship.

The combination of these three factors has been detrimental to many.  

While there has been a heavy focus on the lack of access to finance, a challenge that the micro small and medium enterprises (MSME) sector is yet to overcome, inadequate business skills and restricted business networks are rarely mentioned but have proven key for SMEs’ survival.

Lilian Mramba, chief investments officer at Grassroots Business Fund (GBF) noted that intertwining financial support with training, technology adoption and mentorship are among the modalities guaranteeing a higher rate of survival and growth among small and medium enterprises (SMEs).

“Beyond financing, other critical areas that can ensure MSMEs survive include training in financial literacy and business development, creating sustainable businesses and strengthening local economies. This is the way to redefine Kenya’s entrepreneurial ecosystem and unlock the vast potential of its MSMEs,” she said. 

“Technical assistance needs to be customised for the participants for better outcomes. Additionally, in-person training needs to be enhanced as it creates stronger engagement as compared to, for instance, online-only methods. Further, digital tools need to be enhanced to expand the access of the programme in remote areas and improve communication and knowledge sharing.”

GBF, a microfinance institution that works with SMEs in Latin America, Africa, and Asia, is among the players in a consortium of non-traditional actors that are hoping to revolutionise impact investing through the Jiinue Growth Programme (JGP).

The programme aims at addressing critical challenges faced by many Kenyan MSMEs. The other partners are the Kenya National Chamber of Commerce and Industry, GROOTS Kenya, and Kenya Private Sector Alliance (Kepsa). The initiative also has support from the Mastercard Foundation. Mramba noted that in addition to technical assistance, JGP has also been offering SME owners mentorship.

“Mentorship is a component of JGP with a team of almost 200 mentors across the consortium partners that support those MSMEs that sign up or are interested in mentorship across the 47 counties. The mentorship is individualised per MSME that signs up so that MSME-specific needs are addressed in a customized and practical manner by the mentors,” she said. Small businesses are critical to Kenya’s economy, contributing up to 80 per cent of employment and 40 per cent of the country’s GDP.  An estimated 7.41 million MSMEs operate across key sectors, which means the potential for job creation and economic transformation is enormous. Many SMEs however have short-lived lifespans.

According to a report by the Kenya National Bureau of Statistics (KNBS), about 46 per cent of SMEs are unable to sustain their operations beyond the second year. Mramba stated that while access to capital has been cited as a cause of the deaths of many SMEs, there are also challenges that high operating costs or mismatching products and the market.

Technical skills, mentorship and increased networks, she noted, are among the things that SME owners, especially youthful entrepreneurs lack, which could mean a higher survival rate for SMEs.

She noted that even with access to finance, there are many instances where SMEs owners do not have formal business training, which has made it difficult for many to manage finances, scale operations or adapt to market demands. 

“Access to mentorship and tailored technical assistance remains limited, further hindering growth prospects. JGP deploys digital tools to aid in disbursement of loans, offering technical training and use of credit scoring which not only reduces defaults but also improves loan quality,” said Mramba. “The use of mobile platforms aids in information dissemination to potential participants thus increasing uptake of the products.” She noted that technical assistance has ensured the survival and growth of SMEs that JGP has been working with. 

“A 2024 annual survey reported that 78 per cent of MSMEs adopted the technical assistance interventions provided by JGP, while 84 per cent of participants effectively utilised the funds accessed through JGP. These high adoption rates indicate that the program is effectively equipping businesses with the skills and financial tools they need to grow,” said Mramba. 

She noted that the SMEs that received guidance through technical assistance and mentorship have improved product quality and market reach. “One of the success stories includes Kisasa Weavers, a group of women artisans who, through JGP’s support, improved their product quality and expanded their market reach, leading to better incomes and employment stability,” she said.

“The challenge ahead is sustaining this positive trajectory for both existing and new participants, ensuring continued support and access to financial and technical resources as the program scales.” Over five years, JGP aims to empower 229,500 MSMEs with concessional loans ranging from Sh5,000 to Sh14 million, alongside tailored technical assistance programmes.

The programme also aims to tackle barriers such as limited access to business skills and limited networks. It also looks at fostering innovation, resilience and job creation.