Blog

The Financial Year That We Would Rather Forget

Posted in Entrepreneurship

 

The year 2017 was a year full of anxiety and even turmoil for some Kenyan entrepreneurs and SMEs. Typically , Kenya's election year's are usually characterized by a  "wait and see" atmosphere. This year was no different. However, this election was rather special. We ended up having 2 elections, 2 supreme court petitions, 2 nail biting rulings and eventually an inauguration celebrated by the ruling party's supporters and shunned by the opposition. This scenario prolonged it from a "wait and see" to a "let's talk after all the election madness is over" .

The prevailing drought  affected agricultural output which is a big part of our economy and further dampened the mood in the Country.  Parliament passed a bill capping interest rates at 14.5% in a move to stem the high interest rate regime. However, as the government borrowed heavily to fund its operations and service its every growing debt, lenders shifted their attention to lending government and not SMEs, pushing SMEs into a corner where funds were not available for their operations. In short it was a tough year and many entrepreneurs felt like they were between a rock and a hard place. Some shut down, some became politicians(temporarily if they lost) and some strengthened their faith in order to keep the doors open. Everyone held on to their money. No new ideas or programs were being funded. Everyone adopted the excuse " let's talk after elections" . Payments were withheld. If there is a time to begin planning for the next election, it's not 4 years from now, it's NOW.

The year to come 

Despite the bleak 2017, the Future looks a lot brighter. What can we look forward to in 2018 and beyond? 

Despite the continued low key political risk that threatens to blow up into protests at any given time, we are likely to see a number of trends in 2018 and beyond

Interest rate capping reversal.

In 2018, we are likely to see  a Reversal of the 14.5% interest rate capping. The Central Bank Governor has already signaled that they will be pushing for its reversal based on a study of its devastating effects towards SME lending and unsecured lending in general. There is likely to be intense lobbying from lenders as well as other key stakeholders for the reversal. Should the reversal happen, lending towards SMEs will resume against a backdrop of a growing post-election economy.

Foreign Direct Investment

Whilst Kenya saw a dip in foreign direct investments in 2017, it is likely that foreign investors will troop back into the country citing a more stable political environment and clear policy direction from the Kenyan government. Many deals that were in negotiation phase in 2017 were put on hold pending the election outcome and those negotiations are likely to be revived within the first quarter of 2018. There has been increased interest in Kenya by American, Chinese and a few European union countries like France in making investments in Kenya. Sectors of interest have been agriculture, energy and construction. This will present an opportunity for SMEs to position themselves as service providers or partners for the foreign investors. There will also be an increased appetite for mergers and acquisitions as an entry strategy into the East and Central African Market by medium or large multinationals. 

The stock market is also on the upward trend, something that happens after every election. This usually acts as a signal of the confidence that international investors have in our economy. Since we have continued to experience Economic growth, smart SME owners will invest extra income into strategic companies that are poised to keep generating great returns in the next few years before the next election cycle begins.

Government Focus 

The president in his Inauguration speech made some bold declarations.-Like tourist visas on arrival for all Africans. This set the tone for other bold pronouncements and the government has since set out to focus on 4 main areas. We are likely to see growth and opportunities for SMEs in these sectors .The details are still sketchy but here is what we know so far. 

  1. 1.Housing - The government plans to build 1 million houses in the next 5 years. Which translates to roughly 200,000 units a year, A feat never seen before in Kenya. Will they uphold the promise despite the demand for housing growing by an estimated 100,000-250,000 units against a supply of 50,000 yearly? We wait to
  2. 2.Universal Healthcare - Again the details are still not clear but the government plans to invest in ensuring there is 100% Universal Health Coverage (UHC). 
  3. 3.Food Security and Agriculture - The government has set a target of 100% food security. Details yet to be released.
  4. 4.Manufacturing - The government has set a target to have manufacturing account for at least 20% of the GDP. We are currently at an estimated 14% of

The government has also began a project to set up incubators and hubs in every constituency through the ICT ministry to support entrepreneurs to grow their businesses. 

An announcement was made in 2017 that we achieved Category A status for JKIA which should see an introduction of direct flights to North America from Kenya. This should boost trade  and tourism. 

One compliance  body to watch out for is the Kenya Revenue Authority. Several plans have been put in place to rope in additional taxpayers to fund the governments increasing debt and budget. 2017 was the slowest growth in a decade of tax collection in a year where succession plans are in high gear. Will a new broom sweep clean in KRA and will this sweep more evaders into the tax net? A robust ITax system together with a  business intelligence system linked to the banking as well as government procurement systems will definitely nab more tax evaders and so SMEs that are not yet compliant should note that the authority is closing in on them and soon there will be no easy avenues to hide from paying tax on all business income activities. 

On a sad note, the government has announced impending layoffs of 18,000 workers to tame the wage bill and concerns continue to mount over our indebtedness particularly to China. 

The World Bank has pledged support of approximately USD 150 Million through the Kenya Youth Empowerment Project , that will go to supporting employment creation, entrepreneurship and scaling of SMEs. It is likely that other donors will follow suit in funding similar projects especially agricultural and value chain support programs.

We are likely to see increased Mergers and Acquisitions as International players from larger markets seek to aggressively enter the East African market. European, South African, Asian and American companies are actively seeking to partially or fully acquire local SMEs who have substantial traction and growth. 

County opportunities

A few progressive counties are likely to have great opportunities if the governors keep their promises . Nairobi county is heavily backed by the central government and its initiatives are likely to face less opposition and budgetary challenges in order to prove a point. Other counties to watch are Machakos, Kakamega and Makueni  who have had relatively progressive and development oriented incumbents who will benefit from continuity. Kitui , Kisumu, Kirinyaga and Meru have new Governors who have made bold declarations for development and have Governors who were previously Cabinet Ministers who had a track record for development in their respective ministries . 

Education

Due to the entrance of the over 1 million kids from the Free Primary Education era into high school , there is likely to be increased demand for private secondary school education. With a transition rate of 60% , there is currently a huge shortage of secondary schools to absorb the primary school graduates. As top schools are forced to introduce day wings, there will be concerns from parents on the quality of education and this is likely to build even higher demand for private secondary schools. 

Agriculture

Should there be no drought in 2018 and beyond, there should be improved agricultural harvests. Government investment in food security as well as the increased investments from  private capital sources into agriculture(chamas, investment companies and middle class from urban areas) is likely to grow the sector. 

ICT

Despite the growth of innovations in ICT, a proposed ICT bill is likely to stifle innovation and service provision and a growth of the importance of  DATA collected by organizations will increase demand for data scientists or entrepreneurs. There will however be increased concerns about data protection and privacy and calls for increased regulation.

Mobile lending 

Mobile lending that has already been on an upward trend will grow and we are likely to see lenders finding ways of approving larger loans than the curren micro loans that have proven succesful for banks as well as new micro lending entrants into the sector.

Regional Opportunities

As the region invests more in infrastructure you are likely to have companies , government agencies and development bodies from neighbouring countries turning to kenya for certain expertise. Ethiopia, Somalia, Uganda, Rwanda and Tanzania despite the hostility will seek collaborations in Kenya that can complement their growth initiatives. The EAC will likely strengthen its trade ties. 

Globally, Agriculture remains a great opportunity for Africa as demand for agricultural products for China , US and European markets particularly for Herbs , spices, condiments , specialty foods and meat products grows. etc Our challenge in meeting this demand is the ability to produce consistent  quality and ability to supply large quantities of products to wholesale buyers in these large markets.

As a region the opportunities definitely outweigh the risks. 

 

 

 

JORAM MWINAMO

Managing Director 

Wylde International Ltd

Wu Yi Plaza,Apt. B15, 

Galana Road, Off Argwings Kodhek Rd

P.O.Box 11610, 00100 Nairobi

TEL: 254 722844636

twitter: @jorammwinamo

skype: joram.mwinamo

blog inspiringgreatness001.wordpress.com

WWW.WYLDEINTERNATIONAL.COM

It's time to fire your clients!!!!

Posted in Entrepreneurship

Merry Christmas; It's time to fire your clients!!!!
 
Every end of year you must fire your worst performing clients and on board new ones. Before I give you my rationale let me share with you an analogy.
I was watching a premier league match the other day and the presenters were talking animatadely about which teams were relegated in the just concluded season (Nairobi City Stars and Ushuru just in case you were wondering). While they were being relegated new teams were being promoted; Kariobangi stars, Nakumatt, Nzoia Sugar and Zoo Kericho. (I know you thought I was going to talk about the English Premier League, umesahau at Wylde we belive in Africa.) Anyway, it occured to me that  the premier league has a self renewing mechanism. Every year stronger teams are added as weaker teams are made to give way for them. The league only gets stronger with time. New teams compete to stay on the league and staying on the league earns them more money. To stay on the league teams must work hard, work smart, develop new strategies, put in place better systems, develop better team work, get better players, get better coaches, learn new skills, do more drills etc.
 
Now back to my story on firing clients. As a consultant, a service provider you are the league and clients are the teams. Clients need to be working hard at getting better and clients who you serve should be implementing the changes you are recommending to them and should therefore be getting better and eventually win in the market. If they dont then they should be dropped from the league and allowed to play in the junior league for a season so that they can be promoted when they become better. As you drop them you create space for new clients who will perform better who will grow. As you drop the non performing clients you also create space for yourself to focus on performing clients who can then get better service and pay you more. Every year as the league becomes better and better it is able to pay players more and more and the league itself becomes more profitable and can support the teams in the league better.
 
 
You have heard of the Pareto principle; 20% of your clients make 80% of the revenue. You need to consistently fire the bottom 20% of your clients who are not performing as you move increase attention and value to the top 20% of customers who are performing.
 
If you agree with me then inbox me the names of the clients you are firing this Christmas. If you disagree with me then  tell me why on the comments section and let's have a healthy debate. 
 
 
Christopher Odongo
Entrepreneurship Ecosystem Builder
Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it.
 

The benefits of being in a Business Club

Posted in Entrepreneurship

I joined the Greatness Business Club at Wylde International when my business was at it's knees. I say this because the numbers were not making business sense at all and option of closing was the easier.

The journey at Wylde despite the financial challenges has been a new beginning for my business. The key areas in any business I believe is people, processes and product. These are the three areas I have given priority in turning around the company to profitability.

 

People
The recruitment process is handled professionally whereby the full process of advertising to on boarding is done. No more adhoc employment. this has meant introducing JD's, Role profiles, targets and performance,measurement clearly defined and communicated for each role.

 

Process
Finance being my biggest challenge I'm now working with a Finance Consultant on a retainer fee where we have initiated and implemented
Budget 2018
Finance strategy for 2018 and 5 year Finance plan is work in progress.


Product
We have reviewed our laundry services and created a new product for corporate clients.

 

Caroline Kusimba,
Director Swirl Laundry.
Langata Mall
Langata
 

 

Creating Sustainable Rural Livelihoods for Kenyan Youth, by DR. MELVIN D'LIMA

Posted in Entrepreneurship

All Kenyan counties have a burgeoning youthful population segment. Approximately 60% of our population are below 35 years of age. Our education system creates a dependency in these young people, on formal employment, yet we are in a post industrial dispensation.

Agriculture, much of it slash and burn, forms the backbone of the economy. The question that begs an answer is how do we create sustainable livelihoods for all these individuals without consigning them to being minor players in the supply chain of second hand goods, cars and substandard prescription drugs, among other, fast moving consumer goods.

A Side Hustle is Good For Your Career, by VICTOR OTIENO

Posted in Entrepreneurship

Side hustle has always been considered to be the forte of underpaid employees seeking to shore up their incomes to meet their basic needs. It's often associated with small business ventures such as small kiosk, car wash, movie store among others.

In this day and age of great uncertainty, side hustles must be embraced across organizational functions to include both junior staff and senior managers, by enabling them at the very least to have an extra income stream. A side hustle in this sense may be take the shape of taking up consulting work, speaking engagements, coaching or even developing a product or service.