In today's fast-paced business environment, small and medium enterprises (SMEs) play a pivotal role in Kenya's economy. Yet, access to financing remains a significant challenge for many SMEs across the continent. However, the tide is turning, with increased focus on financial inclusion to help fuel small business growth.

According to the World Bank, only 27% of adults in Kenya have an account at a formal financial institution. This leaves a vast majority of SMEs operating without access to essential banking services such as loans, savings accounts, and digital payment solutions. Without these resources, SME growth is stunted, limiting their potential for expansion and innovation.

However, initiatives aimed at promoting financial inclusion are making strides in addressing this gap. One such effort is the Kenyan Government's National Financial Inclusion Strategy (NFIS). The NFIS aims to increase the number of adults with an account at a formal financial institution to 75% by 2020.

But what does this mean for small businesses in Kenya? For starters, improved access to banking services can lead to increased capital for investments and operational costs. This enables SMEs to scale up their operations, invest in new technologies, and ultimately boost productivity.

Take the example of M-Shwari, a mobile-based bank account launched by Safaricom and Commercial Bank of Africa (CBA). By 2018, M-Shwari had over 23 million active customers and disbursed over KES 176 billion in loans. These funds have helped SMEs invest in inventory, equipment, and marketing efforts, fueling growth across various industries.

Additionally, digital payment solutions can help SMEs streamline their operations and reduce costs associated with cash handling. Platforms like Lipabiz offer integrated business management tools and digital payment services to help SMEs manage their finances more efficiently. By reducing manual processes and minimizing the risk of fraud, these platforms enable SMEs to focus on what matters most: growing their businesses.

To tap into the benefits of financial inclusion, small business owners in Kenya should consider adopting digital solutions like Lipabiz. These platforms can provide access to much-needed capital, streamline operations, and ultimately propel SME growth. As the government and financial institutions continue their efforts to promote financial inclusion, it's crucial for SMEs to seize these opportunities and embrace a more financially inclusive future.

Source: World Bank (World Bank Kenya)