The government, through the Ministry of Cooperatives and Micro, Small and Medium-sized Enterprises, has been urged to work closely with stakeholders in the SME sub-sector to create an enabling environment for the adoption of digital technologies by small businesses.
Speaking on the first day of the fourth Nation Media Group SME Conference and Expo yesterday, Kenya National Chamber of Commerce and Industry (KNCCI) president Richard Ngatia said while many SMEs are willing to adopt digital technologies to grow their businesses, a lot of them face a myriad of challenges that prevent them from integrating ICT into their systems. Top on the list is the lack of access to affordable and reliable internet and other essential infrastructure.
Digital operations
“It is important to create an enabling environment that supports the adoption of digital technologies by SMEs. This will not only create jobs and economic opportunities but also contribute to the development of a vibrant and innovative digital ecosystem,” noted Dr Ngatia.
He noted that SMEs face limited capacity in terms of human resources, expertise and skills, needed to run digital operations. This, he said, can be addressed by leveraging digital hubs which provide digital training and mentorship to the SMEs.
While digital hubs across the globe receive a lot of support for the critical role they play in promoting entrepreneurship and innovation, in Kenya, they face challenges that limit their use and effectiveness.
“There are about 10 innovative hubs spread across the country. Among them are iHub, Nairobi Incubation Hub (NaiLab), Mobile Solution Lab (MLab East Africa), Swahili Box, based in Mombasa, Kisumu’s Lake Hub and Nairobi Garage. We need to be very deliberate in supporting these hubs so that we can increase their numbers,” noted Dr Ngatia.
Kenya National Chamber of Commerce and Industry (KNCCI) President Richard Ngatia makes his remarks during the opening ceremony of the 4th Edition of the SMEs Conference and Expo held at the KICC grounds on March 15, 2023.
He added that, while digital hubs may be well established in the cities, such is not the case in rural areas and traders there are unable to receive the training they need to become as competitive as their urban counterparts.
Dr Ngatia said that, because most of these hubs are privately owned and rely on grants and donations to sustain their operations, they suffer from limited funding, which affects their ability to serve SMEs.
“For example, there are many programmes that KNCCI in partnership with development partners has started to support SMEs in terms of capacity building, ICT training and skills transfer. We can only sustain such programmes for about a year. Once a programme ends, you’re left wondering what you are going to tell the beneficiary,” noted Dr Ngatia, who added that the government, through the National Treasury, can fund existing digital hubs through subsidies or public-private partnerships.
“The government and private sector should work together to develop innovative financing mechanisms that are tailored to the needs of [youths and small businesses],” noted Dr Ngatia.
Public-private partnerships
He called for a more robust public-private partnership in order “to create better linkages between SMEs and critical value chains so as to facilitate scaling of locally made products”. He also called on the government to digitise the tendering process to make it easier for youth and women-led businesses to access the 30 per cent of government procurement opportunities set aside for them.
“If you are an SME in Nairobi for instance and you want to apply for a tender with the County Government of Kisumu, it becomes very expensive because you have to deliver hard copy documents in Kisumu. This also limits the number of tenders an SME can apply for,” noted Dr Ngatia.
His words were echoed by Nation Media Group CEO Stephen Gitagama, who further said the use of digital technologies in business processes will enable SMEs to grow into larger organisations with greater impact. A study by the Nation Media Group on the top 100 mid-sized companies in the country shows that 57 per cent of the companies that invested in digital transformation after the Covid-19 pandemic struck witnessed a major jump in earnings.
Nation Media Group (NMG) Group Chief Executive Officer Stephen Gitagama makes his remarks during the opening ceremony of the 4th Edition of the SMEs Conference and Expo held at the KICC grounds on March 15, 2023.
“I remember back in my junior years, one had to plan for how they would get to the market to purchase whatever they needed. Each month, you would go to the market maybe twice or thrice because the markets were very far. Then over the years, the shops came closer to our homes. As we speak now, because of technology and innovation, you can order whatever you need and have it delivered wherever you are at any time,” noted Mr Gitagama.
The Nation Media Group has been at the forefront of embracing digital transformation, with a lot of its content accessible to audiences online and in real time.
“The growth of the SME sub-sector has a direct impact on the productivity of our country. That is why we, as a company, are committed to ensuring that there is growth and development of this sector through digital adoption,” Mr Gitagama said, adding, the company plans to bring the SME conference and expo to the counties to reach more businesses.
Kenya National Federation of Jua Kali Associations head Richard Muteti said all the stakeholders, including government, private sector and academic and research institutions, should work with SMEs to provide information and technical support that is needed to produce quality products. The collaboration will also minimise duplication and wastage of resources.
“Lack of technology and innovation can be linked to poor workmanship. We need to assist our people, because others come to our country, see the products that are popular here, and make superior products. Because they have the capacity, they sell to retailers such as supermarkets at a lower price,” Mr Muteti said.
Kenya’s economy is expected to generate 9.24 per cent of its total GDP from digital platforms by 2025. This is much higher than the continental average of 5.2 per cent.
Boost their reach
Mr Robert Manyala, who runs ICT firm Robisearch Ltd, said supporting the digital transformation will enable SMEs, which often do not have the big budgets or resources to put up marketing campaigns, to leverage new technologies to boost their reach, and by extension, their earnings.
“The demand for service providers such as plumbers, caterers, electricians and cleaners is very high. Most people go online to search for these services. However, most artisans lack an online presence, making it difficult for them to compete with bigger companies,” said Mr Manyala.
The fourth edition of the Nation Media Group SME expo, whose theme is “Accelerating the MSMEs growth through adoption of technology and innovation”, ends tomorrow. BY DAILY NATION