SME Development

Kenya Association of Manufacturers plays a crucial role in advocating the government to create an environment conducive to entrepreneurship and SME development to secure the future of industry. KAM set out to provide strategic leadership in supporting Manufacturing SMEs towards inclusive global competitiveness.

SME development offers value added services to growth oriented and market ready manufacturing SMEs. It is geared towards preparing, nurturing and growing businesses to take full advantage of new emerging market frontiers both locally and in the international space.

The mission is to foster the development of a flourishing entrepreneurial culture and competitive small and medium manufacturers in Kenya and in the region.

KAM also launched the Manufacturing SME Hub geared towards preparing, nurturing and growing manufacturing SMEs to take full advantage of the available markets.

The Hub seeks to address the challenges affecting SMEs in the country including unfriendly policies and regulatory regime, tedious and lengthy process in quality standards and certifications, access to markets, access to affordable finance and poor governance structures.

Challenges affecting SMEs

Product Development
Quality product development coupled with the right pricing is critical in enhancing competitiveness, exploiting economies of scale and increasing the marginal revenue for various proposed products. However, the local level of product development has been low resulting to high levels of production costs and limited market share thereby resulting to lack of competitive edge among the processors/ manufacturers. In fact, low level of product development and innovation has allowed imported products to take over a large market share.

Access to Markets
Various issues characterise both the domestic and international markets where finished products are sold. The domestic market is shared out between a small portion of formal market that has preference for high quality products at reasonable price, but too small to bring down the unit cost of production through economies of scale; and a large segment of informal market. The international market is characterised by a big imbalance between exports and imports where the latter outweighs the former.

Access to Affordable Finance
There is conclusive evidence from studies that most small and medium scale processors and manufacturers do not have adequate access to credit. There is need for financial service providers and other donor supported agencies to develop appropriate financial products to address this anomaly. SMEs need to be trained on how to develop business plans that meet the requirements of financial institutions.

Raw Materials Supply and Management
Manufacturers often face the challenge of seasonality of raw materials. There is need for concerted efforts to create the necessary infrastructure to facilitate raw material sourcing, bulking, collection and storage e.g. establishment of cold storage, timely transport, upgrading access roads etc. It is imperative that that the processors are trained on simple techniques of commodity preservation. Establishing forward and backward linkages among processors will help to smooth out the supply chain so that firms can capitalise on production areas where they have comparative advantage.

Quality Standards & Certification
Processed/Manufactured product quality is determined by the quality of the raw materials utilised and the efficiency and care taken during handling, processing, storage and distribution. SMEs need to meet quality standards and use of a quality assurance program at the processing facility.

Access to Technology
Many processors/manufacturers are using obsolete technology that has led to low processing capacity, less product diversification and low return on investment. KAM and partners will endeavor to avail appropriate processing technology linkages and deliver special programs and forums for technology transfer offered by the government agencies.

Product Innovation & Patenting
Presence of innovations, inventions and modifications are signs of growth. Study findings reveal that only a few (30%) of firms have come up with innovations in the last 3 years of their existence. The rest are just adopting existing innovations established elsewhere. Most of the firms also have not patented their innovations hence run the danger of copying and counterfeiting.

Policy, Regulatory & Business Environment
KAM works closely with other stakeholders to address prohibitive policies that slow growth.

Technical Expertise
Unavailability of specialised technical training contributes to low productivity.

Products & Services Offering

• Business Advisory Services (firm level support) eg SME Focused research, studies and surveys, Business diagnosis, Business Mentorship and Coaching
• Tailored technical, operational and management training e.g. Strategy and Business Planning, Financial Management, Product and Market Development, Customer Management, Factory exchange and learning visits
• Access to Finance e.g. Business planning, financial literacy programs and linkages to financiers.
• Access to Markets e.g. value chain linkages, trade missions and expos, export market linkages, trade related seminars and conferences

Click here to download the SME Newsletter 2023.