Kenyan SMEs Optimistic About Future Growth, Mastercard Index Shows

Transitioning from survival mode to a state of prosperity in the post-COVID era, small and medium-sized enterprises [SMEs] in Kenya exhibit a notable sense of optimism and confidence for the forthcoming 12 months. These insights stem from the second iteration of the Mastercard Eastern Europe, Middle East, and Africa [EEMEA] SME Confidence Index.

In its inaugural edition in 2021, the SME Confidence Index scrutinized the pandemic’s repercussions on SMEs spanning diverse sectors, products, and services, as well as their enthusiasm for embracing a digital future.

The latest survey unveils a remarkable 66% of Kenyan SMEs expressing confidence in their business’s potential for growth. Notably, an overwhelming 97% of these enterprises identify omnichannel payments as the most promising avenue for expansion, closely trailed by digital transformation at 96%, and access to training and developmental support at 95%. Additional factors contributing to their growth include investing in staff training and upskilling [94%], streamlined access to financial services and credit funding [93%], enhanced data analytics and insights [91%], and the ability to engage in international transactions [83%].

As businesses rebound from the pandemic and pivot toward growth, research highlights that 73% of Kenyan SMEs express concerns regarding the escalating costs of conducting business in 2023, alongside apprehensions about securing capital funding, with 44% of respondents sharing these concerns.

Shehryar Ali, Senior Vice President and Country Manager for East Africa and Indian Ocean Islands at Mastercard, emphasizes the significance of these findings, stating, “The SME Confidence Index results are highly encouraging, as they reveal that Kenyan SMEs are optimistic about their business growth prospects with a notable focus on the transformative potential of digital payments. Micro, small, and medium-sized businesses play a pivotal role in propelling Kenya’s economy forward, and at Mastercard, we remain dedicated to empowering them by facilitating their digital integration and equipping them with the skills they need to grow their businesses.”

Interestingly, the survey underscores that medium-sized enterprises [87%] exhibit a higher degree of optimism regarding the upcoming year compared to micro and small businesses [66%] included in the study.

According to the Kenya Institute for Public Policy Research and Analysis, SMEs play a substantial role in the nation’s economy, contributing to over 90% of the total labor force and actively participating in poverty reduction, economic development, innovation, competitiveness, goods and services provision, and the cultivation of entrepreneurial skills. Kenya boasts over 7.4 million SMEs, employing approximately 14.9 million Kenyan citizens across various sectors.

However, SMEs in Kenya face challenges that continue to impact their operations, including the increasing costs of goods and services [65%], persistent ramifications of the pandemic [61%], and inflationary pressures [52%]. A notable 40% of these enterprises express concerns about repaying loans secured from banks and government sources. Furthermore, issues such as easy access to capital funding [23%] and bureaucratic regulations [23%] remain formidable hurdles.

Mastercard leverages its expansive network, cutting-edge technology, and global partnerships to assist SMEs in adapting to evolving commercial landscapes and shifting consumer spending patterns. Collaborating closely with governments and the private sector, the company strives to establish synergies that promote financial inclusion, motivating consumers and merchants to rally behind small businesses.

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