Kenya: Press Releases: GroFin Expect Improved Business Environment for Kenyan SMEs in 2010

Thursday, 04 February 2010

With accelerated economic growth expected for 2010, compounded by improved weather conditions and increased regional trade activity, small and medium enterprises (SMEs) operating in Kenya can expect a business environment more welcoming and fruitful than 2009. This is according to Kenneth Onyando, General Manager of GroFin Kenya. GroFin is a specialist financier that provides a holistic combination of finance and business support to SMEs operating in Africa. Onyando says, “The year 2009 saw muted effects of the global economic recession on Kenya. However, overall growth was largely inhibited by the severe drought that affected the entire country, low consumer spending and significantly reduced earnings from some of the country’s largest forex earners, cut flowers and tourism. Thankfully aggressive tea and coffee prices in the international market helped to counterbalance the situation.” He believes a number of factors will contribute to more favourable growth in 2010. “Accelerated overall economic growth, in addition to improved weather conditions and increased inflows of capital from the diaspora will encourage consumer spending.” These developments will be complemented by an ongoing large scale investment in infrastructure that will enhance the productive capacity of Kenya as a whole. SMEs will feel the positive effects of these stabilised external factors through a much improved business environment. The coming into effect of the East Africa Customs Union is also likely to increase profitability and income of Kenyan SMEs trading with EAC countries, as goods from fellow members are now duty free. The intra-regional trade between members of the EAC will also boost competition in the region, encouraging SMEs to engage on a regional level and challenge them to adopt best practices in order to compete effectively in a more populated market. Despite a positive outlook for 2010, Onyando cautions that, “Anticipated growth in Kenya is likely to be checked by developments on the political front, largely influenced by the outcome of the ongoing constitutional reforms, as well as continued concerns around corruption.” He expects that this will influence the attraction of Foreign Direct Investment (FDI) to the economy: “Although there is likelihood of some increase in FDI in 2010 compared to 2009, development partners are more likely to adopt a wait and see approach to assess the progress and outcomes of proposed constitutional reforms.” “The expected increased trade within the regional trading block and positive economic outlook should present expanded business and market opportunities for SMEs, which is likely to stretch them beyond their capacity to meet market demand. One of the greatest positive challenges SMEs will face is increased demand for capital to meet market need in order for them to grow alongside the market,” he concludes. Comments (0) Subscribe to this comment's feed Write comment Show/Hide comment form Name Email Title Comment smaller | bigger Subscribe via email (Registered users only) I have read and agree to the Terms of Usage. Add Comment