Eddy Kimemia and his wife Diana Ndungu are the shareholders of Kimemiah Engineering Company Limited, a company that specializes in general building construction and civil engineering (road works). Their two sons also are involved in the company’s operations in a supervisory role at project sites.
Kimemia for the last 10 years has undertaken numerous small projects both in road construction and general building. With the government’s drive to improve the country’s infrastructure, the company successfully won its first major contract for road construction worth USD 6.6 million. The contract required machinery and equipment worth US$500,000.
Challenges to Getting Financing
In Kenya, small and medium-scale enterprises face difficulties in accessing financing. The reasons: inadequate security and a perceived risk due to weak management systems. The cost of operations is further worsened by lengthy business licensing, registration processes and long delays in payments, especially for public jobs. Addressing these obstacles, particularly in facilitating access to finance and capacity building is a key objective of the International Finance Corporation’s Small & Medium Enterprises Solutions Centre (SSC).
Kimemia and Ndungu did not have sufficient security and were unable to obtain bank funding in order to fulfill their road construction contract. They approached the International Finance Corporation’s Small & Medium Enterprises Solutions Centre for financing availed through the corporation’s SME risk capital fund. The fund is managed by Business Partners International (BPI), which offers unique flexible financial products linked to a business’ cash flow. Kimemia was successful in obtaining the required financing and, in addition, the company was also provided with the technical assistance to improve their financial systems.
The World Bank Group’s Involvement
The IFC, which is the private sector arm of the World Bank, has played an important role, in promoting the growth of SMEs. IFC promotes a holistic approach by providing financial solutions linked to technical assistance. IFC currently has two such programs in Kenya, the SME Solution Center (SSC) and the African Development Bank sponsored, Growth Oriented Women Enterprises program (GOWE). The latter works with local banks and is targeted at women-owned enterprises. Moreover, the Bank's involvement in business licensing reforms has recently led to marked reductions in the number of licenses needed to operate business, hence, reducing the costs of doing business. Kenya is recognized in Doing Business 2008 as one of the 10 top countries in these reforms.
RSS