Viffa Consult’s Otieno on business opportunities for Kenyan SMEs in 2022

The year 2021 was a challenging period for small and medium enterprises (SMEs) in Kenya, as they grappled with the lingering impacts of the COVID-19 pandemic. The restrictions on movement and subsequent revenue losses weighed heavily on SMEs throughout the year. However, as the economy gradually reopened towards the end of the year, there was a glimmer of optimism among SMEs for a better outlook in 2022. Victor Otieno, the Managing Director at Viffa Consult, shed light on the business opportunities and growth prospects that SMEs can leverage in the new year. With a focus on key sectors and innovative financing options, Kenyan SMEs can navigate the challenges and capitalize on opportunities for sustainable growth. One of the key highlights for SMEs in 2022 is the opportunity to diversify into resilient sectors such as agriculture, construction, transport logistics, and the financial sector, particularly driven by the FinTech sub-sector. Victor emphasized the importance of value addition in the agricultural value chain to reduce dependency on imported finished goods. He cited the example of Kenya exporting raw coconut products worth 500 million Kenyan shillings, while simultaneously importing finished coconut products valued at 700 million shillings. This discrepancy underscores the untapped potential for value addition within the agricultural sector. Despite the challenges faced by the agricultural sector, which include climate change, limited financing, and technological constraints, there is a growing trend of entrepreneurs embracing technology-driven solutions like hydroponic farming. This innovative approach not only enhances productivity but also positions SMEs for competitiveness in the global market. Victor emphasized the significance of leveraging technology in agriculture to mitigate risks and enhance profitability. In terms of challenges, SMEs in Kenya must address systemic hurdles and information asymmetry to make informed business decisions. Government initiatives such as Keproba and KenTrade aim to provide SMEs with market intelligence and strategic insights for sustainable growth. Access to finance remains a crucial aspect for SMEs, with traditional avenues like family and friends, Chama groups, and SACCOs being complemented by mobile credit financing. The introduction of regulatory frameworks like the Moveable Assets Act offers SMEs the flexibility to use their everyday assets as collateral for accessing finance. As Kenya heads into an election year amidst the ongoing COVID-19 pandemic, SMEs face systemic risks that could impact their operations. However, Victor highlighted the awareness among political stakeholders regarding the critical role of SMEs in the economy. With a focus on fostering peace and fair competition during the election period, policymakers aim to safeguard the economic stability necessary for SMEs to thrive. By navigating these challenges and seizing strategic opportunities, Kenyan SMEs can chart a path towards resilience and growth in 2022.