August 1, 2013

The small to medium-sized enterprise (SME) sector is widely known to be one of the most powerful engines for economic growth. According to the Small Business Administration, since the mid-1990s small businesses alone have accounted for 60-80 percent of net new jobs in the US. Yet, many developing countries, like Kenya, struggle to grow their SME sectors and fail to capture similar economic benefits. The development community has primarily attributed this to insufficient access to capital; microfinance institutions (MFIs) finance micro-entrepreneurs and traditional banking institutions finance larger corporations, but few institutions are willing to finance SMEs. In response, the public, non-profit and private sectors have created initiatives to help fill this financing gap but have focused almost exclusively on supporting larger established SMEs as opposed to start-ups. This is primarily due to the higher risk of financing start-ups, the difficulty of generating short-term financial returns, and the cost of training less experienced entrepreneurs.

In Kenya, less than 10 start-up stage SME entrepreneurs are financed through formal institutions every year. This gap in the SME pipeline means only “micro” ideas are financed which often only employ 1 to 2 individuals while big, innovative ideas with the potential to employ hundreds or even thousands are not. We believe filling this gap is the key to unleashing the potential of the SME sector in Kenya as well as in many other developing countries.

Additionally, we believe that Kenya cannot advance politically or economically until a new generation of ethical, Christ seeking leaders are developed who will strive to put their country’s needs above their own. Kenyan business and political culture is rife with corruption; the relative ease of doing business ethically in the US as compared to other countries is something often taken for granted. The costs of being an ethical leader in Kenya can be great: permits and supplies can be delayed, contracts withheld, and employees threatened. The reality of poverty in Kenya is that people who are “good, decent” human beings are tempted to act indecently due to circumstance. Our task of teaching the importance of an ethical business culture and introducing Christ to young business leaders is paramount.

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