SMEs for Sustainable development Goals in Kenya

Small and medium enterprises (SMEs) play a significant role in driving the Kenyan economy, contributing to 28.5% of the country's GDP, as highlighted by the National Bureau of Statistics. However, these enterprises face a critical challenge in accessing finance, hindering their ability to contribute effectively towards the attainment of Sustainable Development Goals (SDGs) not only in Kenya but also across the African continent. The recent 4th Sankalp Forum held in Nairobi provided a platform for entrepreneurs, innovators, and investors to deliberate on ways to enhance the participation of SMEs in the development agenda. The forum shed light on the pivotal role of SMEs in job creation, with over 713,000 jobs generated in 2015 attributed to SMEs, accounting for 84.8% of all new jobs created that year. Job creation is a key component of Goal 8 of the SDGs, emphasizing the importance of ensuring full and productive employment and decent work for all. The forum attendees acknowledged that while the concept of SDGs has been circulating for some time, it represents a shift towards prosperity for all, transcending beyond just poverty alleviation. The discussion underscored that SMEs are the backbone of economies, drawing parallels to the success stories of countries like Germany, where small businesses have been instrumental in driving economic growth. The forum participants emphasized the significance of platforms like the Sankalp Forum in fostering growth and sustainability in the SME sector. Despite the potential within various sectors such as wholesale and retail trade, manufacturing, hospitality, agriculture, education, and financial services, many SMEs continue to face challenges in initiating and expanding their ventures. The issue of access to capital emerged as a pressing concern, with entrepreneurs highlighting the difficulties in securing funding, exacerbated by stringent lending criteria and high-interest rates imposed by financial institutions. While international investors exhibited interest in supporting Kenyan enterprises, a notable absence of local investors and financial institutions willing to back riskier ventures was observed. Entrepreneurs stressed the need for collaborative efforts to address the financing gap and facilitate the growth of SMEs in alignment with the 2030 development agenda. The discussion delved into the reluctance of entrepreneurs and investors to engage in sectors such as water and sanitation, citing the lack of investment readiness as a primary deterrent. The distinction between debt and equity investment was highlighted, with equity investment necessitating a more patient approach due to the longer horizon for returns. Impact investors were recognized for their role in de-risking investments and aiding entrepreneurs in formulating viable business strategies, particularly in socially impactful sectors. The conversation also touched upon the challenges related to talent acquisition and business model refinement, emphasizing the need for strategic partnerships and diversified revenue streams. Participants emphasized the importance of fostering a culture of paying for impact, enabling the acceleration of entrepreneurial ventures focused on social change. With only 13 years remaining to achieve the SDGs, entrepreneurs in emerging markets are urged to embed social impact into their business operations. The consensus at the forum was to develop sustainable business models that cater to diverse socioeconomic segments, driving business growth while creating positive social outcomes. The call to action for stakeholders is to prioritize impact investment and foster an ecosystem conducive to the advancement of SMEs towards sustainable development goals.