In a major development, the World Bank has today announced that it has injected Ksh. 5 billion to support Kenya’s Small and Medium Enterprises (SMEs). The grant from the International Development Association (IDA) will see Kenya Industry and Entrepreneurship project (KIEP) benefit some 33,050 individuals and 2,393 firms and help them to increase scale innovation and productivity
The World Bank also says the money will support the ambitious development targets outlined in Kenya’s Big Four development agenda and Vision 2030 that require significant growth in private sector jobs and overall productivity.
“We are committed to supporting Kenya in creating employment and business opportunities as part of the county’s wider strategy to fast-track economic growth,” said Diarietou Gaye, World Bank Country Director for Kenya. “While Kenya remains a top innovation leader in Africa, it still ranks 80th out of 127 countries in the 2017 Global Innovation Index and we are partnering with Kenya as it works to improve its human capital, technology and knowledge outputs.”
Currently, Kenya lacks the adequate skills that can produce a solid pool of internationally competitive, technology-enabled businesses. SMEs, which are key drivers of the economy, face difficulties in improving their productivity due to poor managerial practices and information failures around how to upgrade. The country also has limited contact between traditional industry and technology-enabled startups; a missed opportunity for both sides. Kenya’s other challenge includes limited connections to networks of international mentors, angel investors, and venture capitalists all of which make it difficult for local startups and SMEs to grow and compete internationally. For Kenyan women entrepreneurs, particularly those who own startups and SMEs; all these challenges are even more pronounced.
“In today’s fast-paced, globalized economy, start-up driven innovation is key for economic development as it creates new jobs for the growing youth demographic,” said Elena Gasol Ramos, Senior Private Sector Specialist and Task Team Leader. “By strengthening technology incubators and accelerators, the Kenya Industry and Entrepreneurship Project will directly benefit 250 SMEs, 640 students, 15 corporates, 162 startups, 30 technology hubs and 7 technology bootcamp providers.”
The World Bank’s International Development Association (IDA), established in 1960, helps the world’s poorest countries by providing grants and low to zero-interest loans for projects and programs that boost economic growth, reduce poverty, and improve poor people’s lives. IDA is one of the largest sources of assistance for the world’s 75 poorest countries, 39 of which are in Africa. Resources from IDA bring positive change to the 1.5 billion people who live in IDA countries. Since 1960, IDA has supported development work in 113 countries. Annual commitments have averaged about $18 billion over the last three years, with about 54 percent going to Africa.
This comes a few months after the World Bank also approved Ksh.18 billion to support the energy sector in Kenya. The loan guarantee will be used to mobilize private sector financing to strengthen the financial position of Kenya Electricity Generation Company Limited (KenGen).