Africa-Press – Kenya. Credit purchases are the leading reason for the collapse of a majority of the micro-retail businesses in the country, according to industry experts.
The experts say millions of small, independent shops in Kenya popularly known as ‘dukas’ need to diversify, digitise, and partner for growth to survive.
Duka’s serve 70 per cent of Kenya’s fast moving goods forming an integral part of the country’s socio-economic system.
Low digitisation and lack of proper ledger keeping for the shops has seen them unable to access funding to scale their operations leading to collapse of some.
TechnoServe Programme manager for entrepreneurship Elsie Ngina said despite the shops offering goods on credit, they have nowhere to get funding to stock up their businesses.
“Micro retailers should try to avoid giving out goods on credit if they can’t receive goods on credit,” Ngina said.
To help reverse the trend, the Micro and Small Enterprises Authority (MSEA) has partnered with the international non-profit organisation TechnoServe to bring the micro retailers under a single union, the National Duka-Owners Umbrella Organisation.
The agreement aims to bring about positive changes for micro-retailers throughout Kenya by providing them with enhanced financial empowerment, advisory services and capacity-building opportunities.
According to TechnoServe, the micro-retail sector generated Sh816 billion in the Kenyan economy in 2022 and employed 9.32 million Kenyans.
“Through this partnership, we can leverage our expertise and resources to support micro-retailers MSMEs address challenges, by giving them better access to capacity-building, market access, common user facilities, and financial linkages to enhance their productivity and profitability,’’ said MSEA CEO Henry Rithaa.
Though data is limited across East African retail regions, a recent UN report shows that small local retail makes up to 70 per cent of Kenya’s market share.
Nonetheless, these businesses confront a multitude of hurdles, despite serving as the primary choice for the majority of the population.
These obstacles encompass limited access to financial tools, difficulties in inventory management, slow technology adoption, susceptibility to economic shocks, competition from larger corporations, and the gradual dismantling of regulatory barriers as East Africa progresses.
Although they may wield substantial influence in the market, the fragmented nature of their operations has impeded their ability to efficiently manage and expand their enterprises.
“The National Duka-owners Umbrella Organisation is a watershed moment for micro-retailers in Kenya. By uniting, members can now effectively address challenges, negotiate better agreements, and access more affordable financing,” said TechnoServe, regional entrepreneurship director Alice Waweru.
The Economic Survey 2023 indicates that MSMEs constitute 98 per cent of all business in Kenya, creating about 30 per cent of the jobs annually and contribute to three per cent of the GDP.
Additionally, the sector creates employment for 15 million people with a value output of Sh3.3 trillion.
For More News And Analysis About Kenya Follow Africa-Press
