Entrepreneurship

African SMEs Can Exploit Digital Branding and Analytics to Spur Growth

African SMEs Can Exploit Digital Branding and Analytics to Spur Growth

 

We conducted an SME survey in 2017 to find out how SMEs had performed and their aspirations for 2018. What was interesting is that 60% of all respondents indicated that revenue growth was their biggest aspiration for 2018.

Without concrete, coherent and strategic actions such aspirations will remain a pipe dream and would become like most people's annual resolution of losing weight by focusing on occasionally going to the gym instead of a holistic and radical shift in lifestyle.

First and foremost before talking about revenue growth SMEs must focus first on bringing customers on board while retaining existing ones; easier said than done.

TAX ALERT! (Have You Made These Necessary Adjustments to Your Payroll?)

tax alert

 

We’d like to notify our clients of changes in resident taxes:

  1. 1.The Government, through the Kenya Finance Act 2017/ 2018, revised the resident individual tax brackets and increased the monthly personal relief from KES. 1,280 to KES. 1,408 with effect from 1st January 2018. The tax bands and personal relief have been expanded by 10%.
  1. 2.Bonuses, overtime and retirement benefits paid to low income earners (income below the revised lowest tax bracket of 10%, upto KES. 12,298 per month or KES. 147,580 per annum) are exempted from tax. This will marginally reduce the PAYE burden.

Monthly Taxable Pay (KES)

Annual Taxable Pay (KES)

Tax Rate (%)

Up to 12,298

Up to 147,580

10

12,299 – 23,885

147,581 - 286,623

15

23,886 – 35,472

286,624 - 425,666

20

35,473 – 47,059

425,667 - 564,709

25

Above 47,059

Above 564,709

30

Monthly Relief: 1,408

Annual Relief: 16,896

 

Therefore, starting with the PAYE return for the January payroll that is due on 9th February 2018, employers are advised to implement the following changes to their payroll processing. It’s the responsibility of the Employer to deduct and remit PAYE, failure to which it attracts a penalty.

For further information or assistance, please get in touch with Ann through the contacts below:

 

Ichungwa Ann

Wylde International

Tel: 0701 560203

Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it. /info@wyldeinternational.com

Kenya can utilize dead Capital to spur SME growth

icon General Resources ( )The other day Dr.Bitange Ndemo wrote an article on Africa’s poverty contradiction and dead capital which evoked heated and mixed reaction across the country.

The point that Kenya has too much dead capital is what I agree with and submit that can be directed towards SMEs for their growth and well being of Kenya’s economy.

Kenyan SMEs just like other African SMEs face a variety of challenges access to finance being a major reason for their mostly untimely demise. To add to Ndemo’s definition of dead capital of investing in land for speculation purposes, Building ceremonial homes in villages; I would propose to include; Insurance and pension funds investing in buildings and safe government bonds similar to blue chip companies among many other examples of safe investments. How come investing in stocks and government security is termed as dead capital one may ask. For starters if we were to use the Warren Buffet rule on stocks where we do simple arithmetic of subtracting liabilities from assets and dividing with total shareholders you will quickly realize that most listed companies at the Nairobi Securities Exchange are overvalued hence not a good investment.

Research done by Wylde International in 2017 on the state of SME indicated that 68% of SMEs that responded didn’t access finance yet over 40% registered revenue growth of more than 10% of which 23% of the 40% registered revenue growth of over 25% ; this in light of majority of listed companies issuing profit warnings.

The challenge of financing SMEs through financial institutions is a script that is not going to change in Kenya anytime soon in light of interest rate cap and the incoming IFRS 9. Kenya needs to develop alternative forms of investments appropriate for the growth stage of an SME.

What do I mean with this; entrepreneurs are constantly innovating and toying with new ideas every so often and they need funds to test and prove their ideas and concepts. As currently constituted the entrepreneurial ecosystem doesn’t have a channel for financing ideas and start ups; what is happening is such start ups are considered too risky for financial institutions as they don’t have cash flows nor collateral in order to access financing.

Ideally what start ups need is a risk taking financier or a benevolent philanthropist who believes in changing society through enterprise. I believe Kenya doesn’t have a shortage of neither. Donations from Kenyans of all walks of life are the most appropriate form of financing for such seed or idea stage.

Once an entrepreneur proves that their idea is commercially viable they move into what is called early start up a situation in which they are formally registered company. At this point they are still considered a risk by financial institutions hence the best alternative are angel investors who can be wealthy Kenyans such as C-Suite managers, entrepreneurs among others, pension and insurance whose current default investment is land and real estate . As the SME gains product or service acceptance and begins to grow they can now be comfortably be funded by Venture Capitalist and as they progress to towards becoming established companies Private Equity.

To achieve SME financial inclusion will require concerted effort from all stakeholders and a lead by government by taking a paradigm policy shift towards supporting SMEs and finally ensuring that Kenya pragmatically leaps towards Vision 2030.

About Author

Victor Otieno is Director-Research and Innovation at Wylde International This e-mail address is being protected from spambots. You need JavaScript enabled to view it.