Micro, Small and Medium Enterprises (MSMEs) play a vital role in enhancing the economic prosperity and social well-being of Kenyans.

The enterprises also serve as a channel for new ideas and innovations to penetrate the market, contributing to economic diversity and productivity.

In addition, MSMEs are significant drivers of inclusive economic growth since they cover a wide variety of activities in nearly all sectors of the economy.

Despite the critical role they play, they continue to face a variety of challenges. Most of them do not survive their fourth birthday owing to constrained access to finance for capital and operational demands, market challenges, and weak business strategies.

Additionally, enterprises that can access credit face unfavourable loan conditions due to a lack of sufficient collateral, high collateralisation requirements, short payback periods, informal markets, inaccurate data, and high interest rates – they are viewed as risky by financial institutions.

This is mainly due to information asymmetries and informal management techniques, both of which make them unappealing to lenders.

Watch the full story in the video.