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MEDA: Creating Business Solutions to Poverty

September 7, 2017 |by ignite | 0 Comments | blog

The Equitable Prosperity – Maendeleo Sawa (M-SAWA) project is a seven year, $28.7 million initiative funded/implemented by Mennonite Economic Development Associates (MEDA) (supporters, partners and investors) with funding from Global Affairs Canada (GAC) which will run from 2015 to 2022

The project aims to contribute to Kenya’s economic growth and increase job creation by improving the business, environmental and gender performance of small and medium enterprises (SMEs) and small entrepreneurs (SEs) in select counties along the Northern and LAPSSET Corridors in the following sectors: Agriculture/Agribusiness, Construction/Allied Industries, and Extractives.

What types of Grants does M-SAWA offer?

MEDA offers the following Matching Grants to qualified SMEs and Business Associations.

Is your business eligible? Read more http://meda.org/publications-m-sawa/290-m-sawa-project-overview

Interested in Applying for Funding?

Go to https://meda.blitzen.com/form/Kenya-M-Sawa-Project to fill out our eligibility survey.

For more information contact the M-SAWA office: M-SAWA@meda.org +254 706 348 613

 

 

 

 

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CHALLENGES FACED BY SMEs

August 11, 2017 |by ignite | 0 Comments | blog

Sub-Saharan Africa is dominated by micro-entrepreneurs who struggle to grow their businesses; and these small firms are most likely to fail due to the high levels of uncertainty and risk in their local environments. This instability is brought about by many factors including political and economic instability, changes in global commodity prices and regulations.

The world bank lists the top five constraints in Africa’s business environment as practices of the informal sector, corruption, political instability, lack of electricity and lack of access to finance along with a lack of skilled labor and adequate training. The resources necessary to grow a business such as finance, human resources and social capital and infrastructure are less accessible in Africa

SMEs face a more difficult situation in raising money when compared to large firms. This is because many banks prefer to allocate their resources to large enterprises due to the lower risk of default and that they have clear financial statements, both of which SMEs lack leading to cash flow constraints.

Businesses in sub-Saharan Africa are, on average, up to 24% smaller than businesses in other parts of the world, as well as being far less productive and competitive. And even when small firms in Africa do manage to grow into larger enterprises, they do not see the gains in productivity we might all expect. The result is that there are relatively few large firms in Africa compared to other developing countries, though this trend is slowly changing.

There have been rapid changes in technology. The E-commerce market is expanding. This means that individuals prefer internet sales to over the counter sales. Most SMEs lack an online presence thus are unable to sufficiently utilize these opportunities. They lack their own websites to market their own goods. Making large profits does not matter if businesses are unable to effectively manage cash flow. SMEs also lack the adequate skills when it comes to financial management. They should avoid overdependence on one or two very large clients. They should take insurance against debt. These are some of the financial management skills needed.

The aforementioned conditions will cause real problems for Africa going forward if not well addressed and fast because the continent has one of the world’s youngest populations, and it is set to double by 2050, meaning the demand for stable wages and employment will rise drastically. To note is that most employment in Africa is characterized as vulnerable employment meaning that individuals are likely to be working in seasonal agriculture jobs and/ or running micro and small businesses (many of which are in the Agri-sector) which have no guaranteed high incomes or wage receipts. Although this type of employment provides an important source of income for many, it does not typically increase productivity and investment in local economies, nor spur the growth required to drastically increase prosperity.

It is at times like these that we’d typically look to entrepreneurs to create innovative, high growth businesses that will increase the demand and capacity for skilled labor, provide stable wages and employment and attract foreign investment. This makes it more important for Africa’s entrepreneurs to overcome the challenges presented by their current environment. Ensuring that finance is available to firms with the potential for growth should be one way to ensure that the above challenges are overcome. Another is to offer better education and skills training. Both these efforts should improve aspects of the local business environment and help to decrease the failure rate of start-ups.

 

 

 

 

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WHY SMALL BUSINESSES MATTER

August 11, 2017 |by ignite | 0 Comments | blog

SMEs are engines of growth, vital to most economies. Research suggests that micro businesses and SMEs account for 95% of firms in most countries. They create jobs, contribute to GDP, aid industrial development, satisfy local demand from services, innovate and support large firms with inputs and services.

In Africa, SMEs create 80% of employment, establishing a new middle class and stimulating demand for new goods and services. The IMFs Regional Economic Outlook for Sub-Sharan Africa, released in April 2015, says: “Over the next 20 years, sub-Saharan Africa will become the main source of new entrants into the global labor force”. This is an emerging Africa that is absolutely determined to succeed. As a follow up to their bold commitment to infrastructure investment, African governments have now turned to entrepreneurs to support future growth. A vibrant SME sector is a vital ingredient for a healthy market economy. SMEs are responsible for large contributions to value added activities and employment.

The role of small businesses in poverty alleviation, economic growth and job creations has emerged as an important topic in Africa. The importance of small businesses arose in view of the dismal performance of previous policies that emphasized large scale industrialization. Recent economic reforms in African countries have also created opportunities for the fledgling small businesses, and thus generated interest in small business research initiatives. It is generally agreed that encouraging the development of small businesses is an effective way of fostering growth and alleviation of poverty.

Indeed, the foundation of any long-lasting venture in Africa depends on the continuous empowerment of regional SMEs and young entrepreneurs. Governments, the private sector and international investors are encouraged to consider Africa’s young people and SMEs as central to the stability of the world’s economy. These millions of future entrepreneurs need to be nurtured so that the world at large can benefit. Helping African SMEs to flourish is crucial not only for Africa but for the global economy, because it creates a growing middle class with disposable incomes, in tandem with market opportunities for new investors.

However, due to internal inefficiencies and constraints in the business environment, the output of most SMEs can be well below their potential. While small businesses tend to be more flexible and quick to change than larger corporates, they are much more vulnerable to deterioration in the business environment and suffer heavily from stringent policies. They also have fewer resources to draw on when times are hard. Nonetheless, small businesses are very crucial in any economy. While a single, small business may not generate as much money as a large company, it is a critical component of and major contributor to the strength of local communities.

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ABOUT IGNITE MY SME

August 11, 2017 |by ignite | 0 Comments | blog

Ignite my SME is an initiative of FACTS Africa that seeks to provide SMEs with an opportunity to learn, network and showcase their products through a series of seminars across Kenya, Uganda and Tanzania. These seminars target SMEs from all economic sectors that are in the phase of rapid business acceleration and hence would benefit enormously from coaching, mentoring, finance or advisory services to realize their expansion plans.

There exists many small and promising SMEs in Sub-Saharan Africa that have skill gaps and/or limited experience which inhibit them from running a successful business and realizing their full potential. This is especially true for companies that have an established business model but seem to stall; where they could enter a period of accelerated growth. It is exactly in this acceleration phase when the complexities of running a business increase rapidly and when the risk of derailment is a constant threat. FACTS has a direct interest in working with strong and well managed clients, and that’s why we want to contribute to building better companies. The Ignite seminars are intended to catalyze ambition to excel.

Ideally, successful entrepreneurs will master skills in three dimensions: Sales, Operations and Finance. But what we find in reality is that many owners/managers are strong in 1 field, and sometimes 2, but rarely in all 3. With this idea in mind, Ignite my SME was born to offer, through a one-day event, a holistic approach that will cut across all three dimensions as mentioned above. A line up of professionals in their respective fields will be available to give insight on key areas of running small businesses.

The IGNITE seminars comprise of a series of 10 seminars across Kenya (4), Uganda (3) and Tanzania (3). Out of these 10 seminars, we shall have 1 women seminar per country. These are intended to be 1-day seminars with each bringing together up to 150 emerging SMEs across all sectors of the economy as well as SME solution providers. The IGNITE seminars will combine approximately 6 plenary presentations on Sales, Finance and Operations, with ample opportunity to network and engage with various SME solution providers. The seminars will be conducted in the period Aug 2017 to June 2018.

Through the Ignite my SME seminars, we want to (re)emphasize to SME owners/managers what it takes of build a world class company and how they would benefit from working with specialists in different fields. A 1-day seminar will hardly reinvent business models, but the essence is to create an inspirational event that presents the attendees with some “quick win” ideas and an eye opener towards outside assistance.

The common thread through the presentations is “…towards building a world class business…” hence the Ignite my SME slogan ‘Growth Through Excellence’. The events provide a great chance to meet and interact with several established SMEs that are rapidly growing. Additionally, this will be an opportunity to network as well as showcase one’s products/services.

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