Business Daily (Nairobi)
Steve Mbogo
10 June 2008
Just when small and medium scale enterprises were worried that the rest of the year spells doom for business after the post- election crisis and uncertainty over the success of the coalition government, new initiatives are coming up to give them a boost.
The latest is a Sh3.1 billion fund that local medium scale businesses will be awarded as soft loans, grants or a combination of both.
The first chunk of the money will be distributed in September, with the facility only available for the next six years.
The money has been committed by several donor organisations through the African Enterprise Challenge Fund (AECF) and the Alliance for a Green Revolution in Africa (AGRA).
In another initiative aimed at rewarding medium- sized businesses, the Business Daily partnered with audit firm KPMG to carry out a survey that will culminate in identifying Kenya's top 100 medium- sized companies.
The survey is open to mid-sized companies with a turnover of Sh70 million to Sh1 billion. Participating companies should have three years of audited accounts and should not be listed at any stock exchange.
Companies have until the end of June to make entries prior to award presentation in September.
In the enterprise challenge fund, medium scale businesses are allowed to apply for a minimum of three million shillings and a maximum of Sh95 million.
This will be done through a competition where the best business idea, with the potential to help the rural poor and impact on many people as possible will qualify for the grants or loans.
"We are looking for disruptive innovation that causes ripple effect," said Hugh Scott, the chief executive officer of the fund.
The fund will focus on stimulating growth in the rural areas across the continent by supporting innovations in agricultural and financial markets.
The fund said it aims to stimulate private sector- led, market-based solutions in regions and sectors where the private sector's engagement has traditionally been weak.
The fund will target 13 African countries but businesses in all African countries are eligible to enter the competition.
Its headquarters will be in Nairobi with hubs in South Africa and Ghana.
In Kenya, the fund is managed by KPMG Development Services.
Companies will be expected to present their ideas that require soft loans or grants through the web.
After the initial assessment, the selected companies will be requested to present business plans based on their ideas. " we shall work like venture capital funds in helping to develop the best business plans," said Mr Scott.
The fund says it is keen to work with media companies who are able to disseminate rural-empowering information. It will focus on crop insurance, financial services, manufacturing, trading and marketing of goods.
The fund says its foray into the continent followed realisation that the cost of doing such businesses in rural Africa was risky and challenging.
"We want to share this risk," Mr Scott said.
"Competitive grants can help reduce risks for piloting good ideas and demonstrate that the actual risk-return ratio is much more favourable than assumed. Serving the poor can be good business," he said.
Winning business ideas should have an impact on more people and where the applying company can be able to match more than the 50 per cent of the amount of money requested.
The first batch of ideas will be analysed at the end of this month (June 30), with winners being announced in September this year.
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