A majority of women entrepreneurs are running the small business in Kenya. These small enterprises are being written off as a failure yet the model works in other countries. What are we not getting right?
A small business in Kenya is as far as most entrepreneurs go. Most of these ventures are owned and run by women. You know, the women who sell you food and from whom you buy snacks either in traffic or as you wait for the fare to reduce.
These ventures range from the solopreneur to sophisticated ones having less than 50 employees. The benefits we expected from them have not been realized. Thus, some have dismissed them as failures. This small business in Kenya model is being called out for its low productivity and low quality.
Micro-enterprises were supposed to empower Kenyan women by giving them a greater share of the country’s wealth. Instead, the result has been an increase in the number of stagnant small businesses. Microfinance, the backbone of the model, resulted in increased consumption spending and more individuals trapped into debt; not more women entrepreneurs scaling the ladder.
What is causing the failure of these enterprises? They are cheap and easy to start yet 80% fail within the first 3 years. A small business in Kenya has a hard time getting financed. This, though, we already touched on and it turned out that it was a problem experienced across board. Banks are simply more willing to stake in the government’s internal borrowing rather than entrepreneurial Kenyans.
Different studies (the internet believes in this word, this is real though) have, first of all, confirmed that Kenyan women are the dominant players in the small business scene. They show that networks and management skills are the other shortfalls suffered aside from finance.
These women are driven into entrepreneurship by necessity and not by opportunity. So, not only are they poorly equipped to run businesses but also they are driven into it by negative factors. A typical small business owner focuses only on day to day operations of the enterprise. They are incapable of strategic thinking that is necessary to face future challenges-like unoccupied shopping malls driving them out of business. This explains the high mortality rate of such ventures in Kenya.
All this is funny because in a country like Germany small business is a success story. The Mittelstand model sees small ventures specialize in niches, like components, to serve the larger ventures. It optimizes exploitation of resources.
A well-oiled model like that is unattainable without equipping entrepreneurs with excellent management skills. We are already seeing initiatives like 2Jiajiri come up to train entrepreneurs. Even though we vouch for it, trial and error is not an efficient way to run a business.
It is important that the small business in Kenya is no longer expected to be part of the informal sector. This phrase only reminds minds of tax evasion and racing to the bottom. These are things that neither empowers women involved in the sector nor the rest of the country.