Small and Medium Enterprises (SMEs) form a significant pillar of Kenya's economy, accounting for approximately 98% of all enterprises and employing over 70% of the formal workforce. Amidst the ever-changing economic landscape, it is crucial for SME owners to stay abreast of key trends that can impact their businesses positively or negatively.

Growing Digital Economy

According to a report by the Communications Authority of Kenya, as at December 2020, there were 49.7 million active mobile subscriptions in the country. This digital penetration offers immense opportunities for SMEs to leverage digital platforms like Lipabiz Technologies Ltd to streamline operations, enhance customer engagement, and expand their market reach.

E-commerce Boom

The e-commerce sector in Kenya has experienced remarkable growth, with a 24% increase in online sales in 2020 compared to the previous year. This growth can be attributed to the shift towards digital commerce driven by the COVID-19 pandemic and the convenience it offers to both businesses and consumers.

Infrastructure Development

The Kenyan government has shown commitment to infrastructure development, with initiatives like the Standard Gauge Railway (SGR) and the Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) Corridor aimed at enhancing connectivity across East Africa. These projects will create new opportunities for SMEs to tap into regional markets, thereby expanding their customer base.

Rising Cost of Utilities

On the downside, small businesses in Kenya have had to grapple with rising costs of utilities. According to a report by the Kenya National Bureau of Statistics (KNBS), electricity and water tariffs increased by 20.1% and 9.8%, respectively, between April 2020 and March 2021. To mitigate these costs, SMEs can consider adopting energy-efficient practices and exploring alternative sources of power.

Covid-19 Impact and Recovery

The COVID-19 pandemic has had a profound impact on the Kenyan economy, with many SMEs experiencing declines in revenue and some even being forced to close. However, as the country progresses towards recovery, it is essential for businesses to adapt and innovate to survive. This could involve diversifying product offerings, exploring new markets, and leveraging digital technologies to ensure business continuity.

Recommendations

• Embrace digital platforms to streamline operations, engage customers, and expand market reach.
• Leverage e-commerce platforms to sell products online and tap into the growing digital economy.
• Stay informed about infrastructure development projects that can open new markets for your business.
• Explore energy-efficient practices and alternative sources of power to manage utility costs.
• Adapt and innovate in response to challenges posed by the COVID-19 pandemic and economic downturns.