According to Kenya Economic Report 2020, national access to financial inclusion in Kenya is at 82.9 percent, an improvement from 26.7 percent over the past decade. This is a great feat for our country. Access to credit has also increased due to the numerous digital loans available in the market. However this is only helpful to the financially literate who take up the digital loans for business purposes, not for consumption. Such people are able to manage timely repayments and avoid the high cumulative interest rates which are predatory in nature.
The world bank defines economic inclusion as a bundle of coordinated multi-dimensional interventions that support individuals, households, and commodities in increasing incomes and assets. We are yet to achieve economic inclusion at the base of the pyramid.
Watching the above DW documentary as an entrepreneurship trainer was heartbreaking. Listening to the story of Cornelius, his business five years ago versus his current situation is disheartening. He is no longer optimistic and has settled into survival mode. His dreams of expanding his business and even building a home for his family are no longer viable. There is a business skill knowledge gap evidenced by the fact that his product’s price hasn’t changed in five years among other factors.
Most people at the base of the pyramid get into entrepreneurship out of necessity. This article indicates that such entrepreneurs tend to have low education, run smaller firms, don’t expect their firms to grow but are likely to stay in the market. We see this in the case of Cornelius and Jackie. They are both hardworking people, and with the right entrepreneurship skills and SME support, their businesses would prosper. However this is not the case.
In strengthening economic inclusion for the base of the pyramid, the government should develop inclusive entrepreneurship policies. Such initiatives would ensure that entrepreneurs such as Cornelius are trained on basic skills to improve their businesses such as record keeping, costing and pricing their products as well as marketing.
As a trainer, I am amazed by the effect of new information on entrepreneurs and their businesses. Most people at the base of the pyramid rely on peers and hear-say for business ideas and as a result, they end up with outdated market information. Business decisions are rarely based on market research leading to unsustainable business models that just keep the entrepreneur busy.
In addition to business infrastructure, we need to focus on capacity building for SME’s in Kenya if we are to increase inclusion. With the high rates of unemployment, capacity building SME’s at the base of the pyramid is our easiest route towards economic inclusion. As we firm up financial inclusion by streamlining digital credit through regulation, increasing financial education, we should also work with community based organisations to empower entrepreneurs at the base of the pyramid with customised business modules.