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How to finance your business to guarantee business growth and profitability
Kenya, like many developing countries, faces a significant challenge when it comes to access to
working capital. Working capital is the money a business needs to cover its day-to-day
expenses, such as wages, inventory, and other operational costs. Without access to sufficient
working capital, businesses in Kenya may struggle to meet their obligations, maintain
operations, and grow.

One of the main issues facing Kenyan businesses when it comes to working capital is a lack of
access to traditional forms of financing, such as bank loans. Many Kenyan businesses,
particularly small and medium-sized enterprises (SMEs), may find it difficult to secure a loan
from a bank due to a lack of collateral, credit history, or other qualifications. This can make it
difficult for these businesses to secure the working capital they need to operate and grow.

Another issue facing Kenyan businesses is a lack of transparency and consistency in lending
practices. Many Kenyan businesses may find that the terms and conditions of loans offered by
different banks and other lenders vary widely, making it difficult to compare options and make
informed decisions. Additionally, the process of applying for a loan can be time-consuming and
complex, which can discourage businesses from seeking out financing.
To address these issues, there are several steps that can be taken to improve access to
working capital for Kenyan businesses.
a) Nature of business financing
One potential solution is to increase the availability of alternative forms of financing, such as
microfinance and crowdfunding. Microfinance institutions, for example, specialize in providing
small loans to businesses and individuals who may not qualify for traditional bank loans.
Crowdfunding platforms allow businesses to raise money from a large number of small
investors, rather than relying on a single lender.
Another potential solution is to improve the transparency and consistency of lending practices in
Kenya. This could be achieved through the development of a credit bureau that would provide
lenders with access to credit history and other information about potential borrowers. This would

enable lenders to make more informed decisions and would also provide borrowers with a better
understanding of the loans they are being offered.

The government of Kenya can also play a role in improving access to working capital for
businesses. This could be achieved through the development of policies and programs that
support small and medium-sized enterprises, such as tax incentives, grants, and subsidies. The
government can also support the development of infrastructure and services that are critical to
the growth of businesses, such as reliable electricity and internet access.

In addition, the government can also support the development of a more conducive business
environment in Kenya by reducing bureaucratic red tape, streamlining regulations and providing
more opportunities for businesses to access funding from international institutions.

b) Finance & investment advisory services
Another solution is to increase the awareness of financial literacy among the Kenyan population.
Many businesses may not understand the financial products and services available to them, or
may not know how to properly manage their finances. By providing education and training on
financial management, businesses can better understand how to access and use financing to
grow their businesses.

In conclusion, improving access to working capital for Kenyan businesses is critical to the
growth and development of the country’s economy. A lack of access to traditional forms of
financing, lack of transparency and consistency in lending practices, and limited access to
alternative forms of financing are the main challenges facing Kenyan businesses when it comes
to working capital. To address these challenges, there are several steps that can be taken,
including increasing the availability of alternative forms of financing, improving transparency and
consistency of lending practices, and increasing the awareness of financial literacy among the
population. The government can also play a role in improving access to working capital for
businesses by providing policies and programs that support small and medium-sized
enterprises, and by creating a more conducive business environment in Kenya.

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