Small and Medium Enterprises (SMEs) play a key role in economic development and job creation. A recent Central Bank of Kenya (CBK) report indicates that SMEs constitute 98% of all business in Kenya, create 30% of the jobs annually as well as contribute 3% of GDP.
Economically speaking, SMEs are the drivers of Kenya’s economy yet shunned by many service providers, including banks and insurance companies, who consider them as high-risk. In this so-called high-risk category, Safaricom saw big numbers and now develops products and services that not only suit SMEs tastes but also affordable to make business sense.
Apart from products that have facilitated small business operations like affordable high-speed internet or bulk SMSes, the most impactful remain financial related one that have increased financial inclusion. Through these Safaricom products – mainly M-PESA and M-Shwari – SMEs and their owners can access credit and banking services as well as hustle-free money transfer.
Use of M-PESA, the popular money transfer service, has revolution how Kenyans send and receive money. Individuals can send money from the comfort of their phones and receive money in their virtual wallet at anytime and anywhere with a Safaricom network.
This service is also popular among SMEs, who use the various M-PESA functionalities that fit their business requirements. Now most business owners can pay through M-PESA and get paid via the same medium without leaving their premises, which saves time that can be reinvested in business. Initially, someone had to go to the bank or post office, ending up spending more money.
M-PESA also comes with a virtual wallet that can hold up to Ksh140,000 and transact a similar amount in a day. This has provided SMEs a temporary holding port for their cash; some sort of current account that ensures their money is secure and readily available when needed.
The entry of Lipa Na M-PESA, which enables SMEs to receive money, has also increased efficiency in payments. Businesses can get paid through Pay Bill Number or till number depending on frequency of transactions. The Pay Bill number can also be linked to a bank account.
With access to credit limited for many SMEs, M-Shwari has been a major attraction. The service offers soft loans payable within 30 days, which SMEs use to plug their cash-flow before payments come through. This has increased small businesses that have access to credit, most of which have been locked out by banks. M-Shwari also offers a savings option that SMEs are taking advantage of, even earning some interest on the money.
There are other products in the market modeled on M-PESA, such as KCB-M-PESA, which are helping in financial inclusion by encouraging saving and offering access to credit.
Helped by Safaricom products and others in the market, Kenya has achieved a 50 per cent increase in financial inclusion within the last 10 years, according to a 2016 FinAcess Household Survey. Brookings Institution’s Centre for Technology Innovation, on the other hand, positions Kenya at the top of its Financial and Digital Inclusion Program (FDIP) scorecard in a survey of 26 countries across the world.
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