Unlocking Financial Resilience for Kenyan SMEs

# Y in the morning you can find us on our social media platforms 244 channel personally minds is at brand suan in this conversation be delving into mattersmemes that make up 98% of Kenya's businesses that also contributes to close to 30 to 40% of our gross domestic product but however stillmemes in our country go through major challenges that touches on matters access to credit uh regulation uh limits too as well but Absank is coming in handy especially when it comes to supporting SMMES in our country. They re recently pledged to supportmemes in Kenya with a sum of up to 100 billion Kenya shillings supporting over 50,000memes and much more. And to help me unpack this conversation, I'll be speaking to Arasmura. He's the head of banking at Absa Bank Kenya. Great to meet you, Mr. Aras. >> My pleasure. Thank you. >> Yes, Karim Busama. Let's get to know you a little bit. um how did you arrive at Absank and you're now the current head of theme there a little bit of your profile for the youth for the Gen Z and millennial that are watching you right now. >> Thank you so much and thank you for having me. My name is Aras Modura head of SM Abster Bank Kenya. I started my banking career over 20 years ago and I started in a branch ordinarily in a branch doing branch operations and rose all the the way through the ranks to become a branch manager a regional manager. I've worked for two other international banks but currently I'm looking after the needs of in Kenya. Yeah, >> major just not the the financial part of it but a lot of emphasis on the noninancial services to helpmemes grow, thrive and take advantage of the opportunities being presented by the current market. >> Right. Yeah. >> When you speak about uh Kenyanmemes, you've done a lot of uh I believe outreach in terms of reaching out from to different counties too as well trying to nurture them and we'll get to the pledge that you made but has it already been disbbured the 100 billion Kenya links? >> It's ongoing. Oh, it's it's on a roll out basis. >> Yes. Yes. >> Right. But 50,000memes in Kenya is a lot and they contribute massively to a Kenya's GDP. Correct. Maybe in some of the previous interactions you've had, what are the major conversations that crop up whenever you interact withme owners that maybe a lot of people don't get to hear especially when it comes to their stories and their journey. Yes, there's so many things that happen around SMMES uh and first I really want to appreciate that the fact that they contribute a lot to the economy creating employment uh to the GDP and also most new businesses 98% of all new businesses are actually thememes starting all the way from micro going to small and medium enterprises and some of the conversation that come is about the enablement the capacity >> a lot about it is about access to finance but currently Mr. Sak I think access to finance that has been taken care of. >> If you look at the solutions in the industry, the digital providers and access to credit and all that. The the the major piece right now is about the capacity. >> Yeah. >> The capacity to utilize that capital to utilize that credit to access that credit to use it in the right way and also the capacity to grow to thrive and to be resilient so that 10, 15, 50 years to come that business is still thriving. ABSA has been in Kenya for over 100 years. >> So my wish and my goal is can we havememes that are growing at the same pace. So that conversation about access to finance but then beyond financing what next? >> Yeah. >> The capacity to also be able to spread and go to the rest of Africa and also expand to other counties use of digital and technology so that you can go to other countries. The opportunity is massive, >> but the how is the conversation that keeps coming up >> often often. Yeah. And speaking of conversation, before we dive deeper into it, maybe what stuns you or what surprises you about our ownmemes because you're having a career spanning over 20 years. It means you've witnessed a lot in terms of uh the evolving landscape of operations and also some of the factors that favor our SMMES and I'm sure our political temperatures too as well contribute a lot to either SMMES flourish or they dwindle. What stands you about our current SMMES and how they operate? I think there are two things that really stand out and the first one is about the resilience >> right >> Kenyans are extremely resilient starting all the way from that small enterprise or at the nano stage that is starting someone who starts a business something happens they're out of the business it's just one person who is taking care of everything you're the manager you're the financial the employee you're the saleserson and you're doing everything else by yourself at that micro level then you find Kenyanmemes get interrupted by so many things anything happens. MSMES are the first ones to be affected in this country. >> Yeah. >> But then the ability to bounce back that resilience is is quite good. >> The second one is about the innovation. If you look at the Kenya landscape and the innovations that are happening in Kenya, >> a lot of that is actually not being led by corporates. It'smemes who are leading the innovations. Look at the fintech. >> They are being innovated by very young people collaborating with very big brands. And you're seeing a lot of innovations being adopted by corporates, even by government. by you have seen a lot of capital being attracted to Kenya through small innovations throughmemes. So they are extremely ambitious, very creative, creating opportunities but they are big big dreamers but the ability to bounce back quite commendable for Kenyanmemes >> right >> and that just shows that there's uh that sector need to be invested in a lot and I believe there's also a need for collaboration between the private and uh the public sector rather and the public sector or the government too at large so thatmemes thrive but also let me ask you about your is it a three-year commitment finance commitment ment program to support 50,000memes maybe how much has gone to micro MSM2s too as well and how much has gone tomemes if you are to break it down a little bit for the purposes of understanding because 100 billion is a huge sum of money yeah correct so so this is our pledge that that we are looking forward to empowering the MSMES and from the small enterprises around 40% actually 45% has gone to the small enterprises and to the medium enterprises the rest of the the financing. >> Yeah. >> But also in between there 40% has gone to women and youth. >> Right. >> So so we we we also keep tracking it to see the utilization and the consumption. >> Mhm. >> Yeah. Right. Does does that mean at some point maybe cuz you said you've mentioned it will be on a rollout basis. Does that mean at some point you'll bunk it up and add it and make it a little bit bigger so that we have many other startups as well accommodated on board because SMS keep on cropping up and it starts from a startup before it even transition to the journey of even an MSME2 as well. Yeah, correct. Because this is on a continuous basis, we are saying that our target is to ensure that we able to push that and empower over 50,000 MSMES >> with 100 billion. And so our commitment is on Aurora basis as we continue to see the needs emerging and because we have plenty of cash and we have a lot of liquidity to push out there to the market. Mhm. >> So assuming that money is consumed before the period and the target to ourselves then we are able to still go back and push in more because we are really committed to transforming that sector. >> Yeah. Yeah. Uh when you you mentioned even in my introduction to as well I mentioned one of the major challenges thatmemes and startups and MSMES face is access to credit and you mentioned very clearly finance is no longer now an issue. If you were to uh look at it with the lenses of uh Absa Bank, maybe how much is it that you guys are zeroing it down or reducing for a formal theme to be able either to borrow or access so that they operate effectively in terms of rates. Okay. On average you'll find okay the rates differ because we have a different kind of a risk profiles for the customers >> but you find currently even in our current market the whole banking landscape and the financial sector >> interest rates are have now really gone down because of the monetary policy committee has really been looking at the pricing in terms of controlling the central bank reference rate >> and so on average you'll find an theme is able to access financing between 14 and 16%. >> Right? We are coming from highs of 20 and in the past it was going all the way to 24 especially for the microenterprises looking at the risk profile. So based on the way we see the risk in whichever individual business the history and their profile then we able to price them >> but by and large access to finance in terms of the pricing is not a really big challenge because you find there has been efforts by the banking industry >> to contain that >> right >> now where we are finding again another opportunity is access because they can access money is accessible digitally banks are accessible digitally mobile money opportunities are all over you can be able to do your the banking and also control your account. So accessing both the credit and transactions collecting and all that is not a big problem. >> Yeah. Now where we are finding now we need to do more is build financing >> because you can access through your phone you can do your transactions you can do an appabsa you can collect everything digital the money lands to your account >> right >> but then how well you utilize that capital >> right >> the kind of financing that we give you and also how easy we make it for you by removing some of the barriers that go build now the traditional way of lending >> yes >> and in that case some of the things we've done is also to introduce unsecured loan facilities >> unsecured loan facilities Yes. >> Okay. >> And uh we can give up to a maximum of 6 million >> unsecured. And uh for the small enterprises we go up to 3.5 million. >> Right. >> But for the medium enterprises we go up to 6 million. >> Again depending on the capacity >> because beyond capital capacity comes in very very strong >> right >> both the capacity to get the money and the capacity to utilize it appropriately. And for us as a bank, we are looking at how do we give you the right capital >> so that we again don't finance you in a in a mismatched way. >> Yes. >> Yes. So the the the other thing we are doing is also to integrate them with the the value chains within their areas of operation in the sectors. Okay. >> And uh we are doing it through ecosystem banking >> and the ecosystem financing the way we do it is we look at different value chains, different supply chains and we again able to give them secured financing. >> Right. Uh let me ask you Mr. rosters. If you were to practically apply it to an average normal uh trader, let's imagine a trader at Gcoma market who wants to access um this uh funding program. Are they eligible? What makes them eligible or at what place of their operation, business operation? Should they find themselves uh accessing such funding from AMSA bank? Is there a platform? Are there avenues that already have been put out there by ASU Bank that can make them access this funding? Okay. The the first thing is to establish a relationship >> because banking and lending is primarily dependent of the history. >> Exactly. >> Yeah. Because you have to look at the history of the transactions. The beauty about it is that the history we can look at the history from elsewhere. We can look at your mobile money transactions. We can look at your circle statement. We can look at what else were you doing with your with your financing with your banking on a day-to-day basis. We can look at a statement from another bank. And so when we combine all that holistically then we are able to see how much of the turnovers are you doing how is your banking history so that we can gauge the capacity. So the first thing is to establish that relationship getting an account but then getting this the relationship manager you know the branches who is going to help you and take you through because where we find a challenge is when anme walks in wants financing but they're not able to explain correctly the right kind of funding model that they they require. So you'll be advised about the ways of funding but it is based on the information that you give to the bank. >> So based on that history once we put it together we have the technology that is able to analyze all that and we can holistically see >> based on the need that you have and the goal that you have and the gap that you want that you have how much is good enough to take care of your business. >> Right? But uh blindly just going to access alone because one qualifies for it is something we really discourage people and our relationship managers are also trained to become advisers. All right. >> So that they also able to coach you and help you as a business person >> to understand the right kind of financing for you. >> Yeah. for Jenzi who's watching this show and possibly they're dreaming to start a business and I'm also want to loop in Amamoga are they equitable to this type of funding uh from your institution and what is the route that they can follow because when you look at Jenzis and the way they're living right now they're all about aesthetics social media drives uh their daily life uh they're also multi- autonomous and also multi career oriented somebody could be a television presenter but they're an entrepreneur they're running a business back at home. They're also an influencer. If they were to journey down this path of getting this funding, uh what would you advise to them or what are the available options for them specifically a Jenzi or also a mama? Do they have a host in this race? >> Yes. Yes. Yes, they do. >> Uhhuh. >> But but uh again going back to what I was mentioning, what is the goal? >> Mhm. And uh the beauty about it is we able to consider like all the sources of income like you you look at the >> genzies they finding they're doing multiple things and they have different capacity even different careers. >> Someone is working online they're getting their payment from international sources. They also doing writing articles. They're in a physical job. They also doing a gig. So we're able to consolidate all that and have a wholesome view and review of the person >> based on the kind of incomes they get, how regular they are or whether they're periodic. So that then we can be able to match the the financing based on the inflows. >> Yeah. >> For the mamaboga again uh it's very simple because nowadays it's very easy in Kenya to keep your financial record straight because you go to any anybody selling in the in the streets you find they're being paid through mobile money. >> So we able to analyze that statement and see are we able to finance you based on the history that you have. >> For the ones who are trading within their personal space because you find a lot of them using their their own names within the consumer banking. We also able to support them through their personal account >> but we know most of that money ends up in business. We have something we call Timisa which is an online platform where they are able to get scored based on their pesa transactions based on their their behavioral data and we able to to allocate them a score a predetermined limit. >> Yes. >> Then they able to access that as a small capital as a startup >> before now they come to formalizing formally to where we can actually look at the actual financials. >> Yes. >> Yeah. >> This one stunts me. It says four in five Msmemes die before year five. Correct. Uh from where you sit maybe what is the number one killer of SMMES that are in the inception period or they're in the burning period? You you see that period the bading period as you rightly put it is is a very risky period where if you walk alone without a goal and without a clear plan you'll be all over. And one of the killers is actually not access to capital but the capacity. And capacity I can define it in maybe two broad ways. First is the capacity to be able to scope the market and do a plan and a very good process and as to how you want to carry out your business. >> Yeah. >> And so you find a business is well funded from different sources. It could be bank, could be friends, could be family, could be from savings. But then along the way uh this MSME doesn't have the capacity to drive this business doesn't have the system and the process to separate for example their their financing the planning the budgeting so the diversion of funds starts kicking in >> and any good opportunity again going back to the goal any good opportunity that comes they jump into it >> we are very good in trying too many different things and you find four out of those five MSMES by the time they're failing they have started either another business >> they have started a bill they have put in money in something that looks attractive that is going to earn them crazy interest. >> Yeah. >> So by the end of 5 years the initial goal from year one >> Mhm. >> they have already deviated from it. >> Yeah. the other challenges that are systemic and those are normal the financing challenges but as you can see again in the industry there are many other sources and ways of financing but even a financed business >> you'll find some of them failing because the challenges are there the the planning the goal um and also the structure >> because sometimes you can run a small business but you find we sometimes we don't take ourselves seriously >> to a point that you can do a budget and a plan >> right >> on how to manage your cash flow >> right >> so when you truth blind. You don't know what will bring you down. >> Right. >> Yeah. >> Right. And Amster Bank boasts of having trained 50,000 plus SMS. Is that correct? Is it 50,000 the exact number or it's more >> the the training? >> Yes. For formemes specifically >> is more because we are doing it also in conjunction with the Absa Banker Foundation. >> Right. Absolutely. And then maybe in that process, how do you determine if anme is now creditw worthy? And now after it's been given funding, uh are you able to predict it can survive its next bad day or maybe a disaster or an accident that happens along the way or a loss? Cuz business is about risking literally entrepreneurship. >> Yeah, correctly. We do it with the different partners because we have a different providers of the uh business development services the BDS >> and so these are the experts who work as partners with the bank >> right >> so that we able to take them through training programs uh some of them we are also looking not just for credit >> but they're looking for capacity to do governance they want to do systems and processes >> others are looking for financing so we are able to see cumulatively the journey they have taken >> we look back to the history so that we able to to determine at this rate if you to look at the training program may be going for a certain period of time through us and also through other because have access to different programs some of them are selftaught >> you can be able to see based on the history and the projection and also use of technology and AI >> what is the likelihood that the behavior of this business is likely to take it to the next level >> and that way we are able so to guide them even right before time that you already in one year you're already in two years. >> Yes. >> And some of them you can clearly see that you're not ready for financing right now because it comes at a cost. >> Yes. >> Are you able maybe to get other alternative sources of funding >> like some of them are able to do from own savings, others are able to do from other partners, >> right? >> Then they get to prepare for the next level of funding. >> Mhm. >> But beyond funding, the other thing we do is the building capacity because you might have the funding but then the capacity to be able to address the needs in the market >> to get new innovations for new products, >> right? Once that one is lacking, you will be ready for financing, but then you're not able to capture the market, >> right? >> And the other thing we do is also give them opportunities to find new markets. >> Mhm. >> And maybe we can be looking at that at a later point. Yes, absolutely. Uh speaking of that, maybe if you are to pinpoint in terms of supply chain, what are that managed to receive training in terms of the supply chain or different avenues that tap into the normal average daily Kenyan life? Oh. Uh once again what are the businesses or SMS that you've managed to train >> uh specifically in what areas average yes exactly the sectors for average Kenyan life >> the the the first one the most dominant one is in trade >> mhm >> and that's looks like the most uh common starting point for most businesses >> okay >> because uh trade and services and especially on the services because the investment may be your time someone is just providing services uh even fresh from school others you find they have grown others they're just an extension of a big enterprise >> or a big corporate but they're doing some bit of work for them by the side as an agent or as an extension of their market outreach. >> Mhm. >> Uh the other one that we are seeing really emerging is about lighter manufacturing. We are seeing a lot of manufacturing happen happening in a small way. >> Uh especially the the young people coming up with new innovations. >> The women also coming up with the new innovations at home. We are seeing a lot of also agriculture and value chain uh value addition in agric. >> Uh young people again are really going into agric and trying to do it in a different way. >> Yes. and technology because again in tech we are seeing a lot of innovations >> and you see part of the innovations that are running in the country are being started by young people >> right >> uh and within the MSME space >> but then they plug into big partnerships to scale up >> right yeah >> this one is a very interesting question coming through you're pushing uh for an ecosystem and supply chain for products like Wizia stock yes >> which anchors farms such as uni liver does that mean maybe a shop outside a big corporate value chain is still locked out of first working capital there in two different ways. >> Mhm. >> You can access capital normally even if you're not within the established MOU or for example the univer which is now through the Vession. >> Okay. >> But then the terms will be different because you are coming as an individual. >> Now this one for Vasha the good thing about it is you riding on an anchor an established relationship >> with this anchor. And for example, if you look at un liver, univer is able to give us the data at the history and we can tell for the last 3 years, this is how much you've been supplying. But again, your potential is at another level. So there's a financing gap and through that we can be able to push um unsecured facility >> for stock only >> payable only to the anchor who is in this case for example the univer that you've just mentioned. >> And so that money cannot be diverted. So the cost goes lower, the limit goes higher, the access is enabled through our platform. >> So it means that if you're within the platform and you are within that uh value chain financing arrangement, >> it is easier, it's cheaper, it's faster, >> right? >> If you're without you still access it, but the terms are different. >> Mhm. >> But in most cases, you'll find in one way or another, a trader, a common trader is in one of them. A hardware is maybe supplying something for a big enterprise. You're supplying something for a big manufacturer. Mhm. >> So we keep on boarding them uh the big cars then for all their distributors then we able to finance them so that they can be able to sell >> what they can manage to sell >> not only what they can manage to pay for right yeah uh and and how do you bring the bring in the aspect I don't know if you guys face any any sort of competition cuz at the same time you guys are giving credit to some of these SMMES also the other side digital lending institutions are also heading for the Samsung uh ecosystem or Samsung uh avenue you. So how you guys striking a balance a healthy balance so to say between digital lending institutions and ABS bank as a finance institution? >> Yeah the good thing is that in the industry we have information sharing. >> Mhm. >> So through technology we are able again uh to determine the creditworthiness based on other borrowings in other from other sources. >> Mhm. >> So that's why with the scoring that we do we're able to quickly pick that this person has borrowed from ABC and now wants to borrow from D. Yeah. >> And their credit then should be this or their capacity >> is to a certain extent so that you don't overburden them. >> So information sharing is good both for the bank but also for the borrower >> so that you don't just pick a load that you cannot be able to carry >> because credit can kill you if you use it in the wrong way >> and if you take too much than is required by the business. >> Mhm. >> Yeah. Yeah. And I want you as well to talk about uh now the part of the program. So the finance programs that you guys have at Absa Bank. I think the striking one too as well is the women funding program. Talk about it and how has it impact impacted women inmemes or entrepreneurship or startups at large. >> Okay, maybe I can start with the one that you've just mentioned. If you're within a well established value chain distribution for a big enterprise a manufacturer uh then we are able to solution you on the value chain um financing through ecosystem or through the vization and what we do is that we give you money for the stock to buy from an ana through an well established ecosystem or well established MOU >> with very defined parameters and so we are enabling you to just take in the stock that you can be able to sell. >> Yeah. So there's no issue of stockouts and although even to oil marketers and to the ones that are within the retail of of oil and gas. >> Yeah. >> The second one that we are doing is also LPO financing. Um if you are within a well established um you are supplying to a big company where we have an arrangement with them trip agreement that you you are supplying to them you have a history with them we can finance up to 70% of the LPO >> up to 50 million in discounting. Again you have been in process that need to be discounted delayed payment. >> Yeah. >> The other thing we are doing is also through the women again we brought in partners who are enabling us to both build capacity for them but also to give them higher limits >> because for a women business uh we look at them differently >> and we also able to give them higher limits than than usual. >> We also able to do some risk sharing guarantee with some partners so that when they don't have security they can be able maybe to access a higher limit and secured than a conventional business. Right. >> We also doing Islamic financing so that our Muslim brothers who want Sharia compliant programs and financing >> then we have a fullyfledged um department that looks at it that way and they're able to get the kind of financing that aligns with their faith. >> So irrespective of where you are playing in then it becomes much more obvious. Then the other thing we've done we have a business club and this business club is again for helping us to to help them build capacity and give them we have four access pillars that I help them access to financing to mentorship and coaching to training to information and market linkages >> and this is the one that now takes them out to markets outside of Africa within Africa and also business forums within Kenya. >> Yeah. >> I saw notification here. What's an LPO? >> An LPO is a local purchase order. Right. >> Yeah. So once you get an order from a well established company and that are within the companies you're working with, we can finance you to supply. >> If you have an invoice from them and maybe you're going to be paid after 90 days, >> we can give you up to 80% of the invoice value as we wait for the payment. >> Yeah. >> Uh you mentioned a women's funding program. I'm trying to be a little bit cocky. Where is the boy child funding program here? Am I in what category is it included? Yes. Uh boys are what do we make all the others and you know do you know September is mental suicide awareness month the boy child on the biggest end of the spectrum. >> Correct. Correct. >> Right. Does that mean they're always forgotten when it comes to even inclusivity or some of these uh forward moving uh movements especially when it comes to empowerment? >> There has been this idea that the boy child is able to access what maybe the woman can't access. >> Mhm. uh traditionally looking at the culturally where we coming from right >> when we were coming to the bank they were being asked for title deeds the traditional way of lending >> yes >> and I guess who keeps the title deed it's the man >> who is moving around with it has his name in it and all that >> so we saw and as an industry >> that there are so many opportunities for women >> but because traditional lending was happening through a collateral >> then they were being locked out >> and that's why we also came up with the other options of cash based cash flow based lending. >> Yeah. >> So that is why now the bank was proactive enough to say can we put the gender lens and traditionally women are better payers and better savers if you look at the data. >> Yeah. And >> why do men always have bad habits when it comes to fin >> man we need to have a conference. >> We need to have a conference. >> Yeah. >> You see men are risk takers >> and men will risk everything else. But women are bit conservative >> and they can come pick up everything close the business start fresh >> but man will always think about again we carry a lot of burden so we have to take that risk >> so based on the risk profile then it's easier to extend to our sister something that is more favorable >> now that they were traditionally locked out now that is changing because we've seen women doing wonders wonders >> absolutely especially women led or womenowned they are massive out there >> oh they're doing fantastic things >> creating out of employment We we've been calling sometimes for those niche discussions like women are turning up for if you calling for fresh produce exporters forum you find over half of them are women >> right >> look at avocado >> right >> all the forums I've held you find majority of them are women >> extraction of oil nuts avocado and coffee >> right >> women are doing great and I think one thing I've liked about the way the women businesses are run they don't mind starting small >> and they also co-work they work with others So they end up growing men we want to start big and everything. >> Yeah. >> So again that becomes something to consider when we looking at women owned women led women managed >> and also we businesses that are producing products for women >> right we also categorize them under that >> that's a very big niche >> and also employing women >> right >> yes >> boy your day is comingate others we are heading there slowly but also men are the biggest supporters of women anyways. Yes. >> So I believe it's a fair equation of it too. But also I'm interested Mr. Ras to understand you've been doing this uh training forum associations county to county as well. >> Yes. >> Is that is that correct? Yes. What country what county beg you pardon has shown a lot of resilience in terms of the growth ofmemes and the nurturing. >> I think in Nairobi maybe because of the numbers and the proximity >> and also the interruptions. Anything happens in this country Nairobi has to be affected in one way or another. disasters >> when we had disasters sometimes I think last year most of the businesses that are swept in the downtown the stock that was swept away were actually for MSMES >> uh you wake up one day you find maybe something is happening and the whole road has been cleared even the traders within a certain area maybe there's an infrastructure coming and uh they within the spaces that people need to move again you find that happening >> when you have interruptions and there's something happening in town again you find the people who close the businesses first again the SMMES but then the ability to bounce back is is quite impressive >> right >> so I found them to be quite resilient >> again you move them from one location you find them they have moved to a different location >> you find someone doing business and has three multiple locations in within Nairobi and trying to run all of them at the same time I think in Nairobi I've seen a lot of resilience >> yeah so you rank Nairobi as uh the leader what about the middle and the least >> I think uh the region you around Kenya. >> Uh-huh. >> Again, maybe I'll give it because of the proximity because it's easy to >> to do a day trip, get goods, go back, change the business. I've also seen people changing their business quite quickly. Someone was dealing with this, but then he realizes something is changing. >> He's able to get the goods by morning, by 9, they're back to their shop and they actually open and they've already taken the whole journey, >> taking the stock by themselves and they're back. >> Mhm. So, so I've seen again a lot of that and also a lot of migration and also partnership. Again, look at what e-commerce has done. >> The ability to deliver quickly. Um, you buy an item and within 2 three hours it's already with you. If you don't like it, you return it and in the evening it's back. >> Yeah. >> So, that again gives an advantage. >> Mhm. Yeah. >> When it comes to maybe risks cuz right now we are speaking of El Nino reigns coming very soon. uh from your own perspective and lenses are Kenyan uh SMMES are ready for this uh possible disaster that could come up or maybe just as a cautionary tell too as well if you were to advise them what should they do and maybe do you think they are ready for such uh disasters like El Nino and many others henceforth going forward because the year is coming to a close most of them are taking stock of what they've been able to accomplish throughout the whole entire year. Yeah. And to be honest, one of the challenges we have within the theme sector is the to be forwardlooking. >> Mhm. >> Uh there's that tendency of the one day at a time >> and one deal at a time and one sale at a time and one month at a time. And that is where we that's why we've introduced programs for capacity building >> to help them come up with a systematic way of running their business. >> Yeah. >> And that preparation now sits in there. >> You find every day you wake up, you're hoping, wishing for the best, >> right? But then putting in plan in place sometimes involves some bit of cost. And when an theme is comparing the cost of for example an insurance and the cost of getting extra stock that trade-off is something that we really need to push them to be able to adopt >> right >> and and if you gone ahead and introduced a an insurance package that is able to take care of theme >> for both the political violence for interruptions to do this disasters and anything that can just happen just bundling it together making it cheaper but also making it one premium that is able to take care of several other options. >> Yeah. And to be honest, we are not at that place of being ready to handle that. >> We tend to be more reactive than proactive, >> right? >> Because some of the things that we should be doing now trying to assess the disaster uh risk management measure that we can take what we call a business continuity like in the bank. What would happen if my place gets flooded and I want to be in business? How do I build resilience? >> We are not really prepared. But as a bank, part of the things we do on a monthly basis, we hold a webinar and going forward the online webinars we'll be holding is towards preparing them for the changes that are likely to come and affect their business like in the next foreseeable future like the next six months. Part of it being Elino, >> right? You've mentioned Mandano, I find it to be really interesting because if you take a look at the last past two years, Mandanos have been the order of the day. uh what of those that maybe were burnt down, they were invaded or infiltrated by guns. Uh have have there been any incidents at some point when you've interacted with search and maybe how did you help them or aid them in bouncing back into the business game? >> All right. >> Have there been any instances? >> There has been there has been incidences good and bad quote unquote >> whenever there were these interruptions in town. Mhm. >> We actually saw even the banking goes down, the sales go down and all that. >> Yes. >> There instances whereby we had a certain theme was doing very very well. >> Yeah. >> Three weeks before they canceled the premium and said because I don't have a loan, >> right? >> I just in take the basic basic cover. >> Mhm. >> 3 weeks later the shop was invaded. It was a very sad story because they didn't see the need to have it. We have a very good case again on the on the flip side of someone who was servicing a loan facility had a very very good wholesale outlet >> and it was invaded goods were taken away by the goons and then even the premises were were destroyed and in a week's time they were back. >> Yeah. >> So people started wondering how come this person has been this person is very maned quote unquote >> but that was not the case. It was actually the cover was had what we call the political violence in it and terrorism >> and so it was able to help them bounce back >> when we had flags I had a trader who was in downtown and the engines and the spare parts were swept away but they had insurance that was taking care of any disaster that would affect their way to operate and the stock and all that. >> Yeah. >> And within a period of two months because again they had to do importation of new stock they were able to bounce back. >> Yeah. So two different stories that we've been trying to push and showmemes how to build resilience through risk mitigation >> and that's why we have come up with a way of trying to bundle a product >> so that instead of having so many insurance policies that you are doing every now and then >> if you plug into this one and we partnered with me insurance >> then you're able to tick most of the boxes >> because any small interruption including medical interrupt the entrepreneur the business princes the the environment climate change the political environment >> and the is out completely. >> Exactly. >> Yeah. Right. Um at some point we were debant we were debunking rather the finance bill uh 2026 and also the finance finance uh budget for financial year 2026 2027 that's one of the closest that states uh they'll have to borrow domestically maybe from your understanding and your lenses how will that affect uh SMS in terms of borrowing domestically >> instead of going uh a foreign voice >> the domestic borrowing by the government. Yes. >> What what it does it creates appetite for the banks to lend to the government >> because it's considered less risky. Um when you look at the sovereign risk >> and if that happens then what we have seen traditionally is where domestic borrowing goes down >> because there's more appetite towards lending to to to the government. >> Yes. But but the good thing if you look at the growth of domestic borrowing in the industry >> it's it's been growing I think in the last three years there has been growth because banks are injecting a lot of capital to the local market >> right >> and that's why for us we are very deliberate the reason we set aside funds and we say this specifically is going to >> to the MSMES locally >> is because we have a ratio or a threshold we want to maintain and say within our domestic market then we cannot ignore the local market. >> Yes. So yes, there's appetite when the government is borrowing domestically, but with a plan, you're able to set aside funds specifically to lend to the domestic market. >> Yeah. >> Which we've already done, >> right? >> Yeah. >> So would you say that's a good move or in between? >> It is how we we strike the balance because if you look at what has been happening in the indust in the industry, there has been a lot of campaign in terms of bringing down the cost of borrowing but also availing um making it affordable and reachable, >> right? So I'm finding a lot of um actions that are deliberate towards ensuring that even if there's appetite on the government side >> this time that is available. So it's it's a balance. It depends on the decision that every bank will make. >> Right. >> Yeah. >> The zone is interesting. I'm actually just learning of it right now. Absang business club takes entrepreneurs to Estonia. Correct. >> Yeah, we did that. >> Right. Uh and Finland too as well. Yeah. >> Correct. Maybe how many of those uh that you've managed to take abroad have landed export contracts cuz that means that you guys are taking them internationally and across borders and beyond. >> Yeah. Uh we went to SMMES to Estonia and Finland and also later we went to the US >> and the reason we were doing this is to explore markets that are unconventional >> because traditionally people are used to going to same markets >> and uh what was interesting is is that before we left >> we did what we call a a businessto business matchmaking. >> Yeah. >> Online >> and we had profiles of the the institutions and the other businesses that are in Estonia. >> Yeah. Yeah. >> So by the time we were going there, they were actually going there just to go and see the place, formalize, get to meet the people behind the contract. >> Yeah. >> And that was especially in the IT space. >> Yeah. >> Very very interesting conversation that were happening again Estonia and Finland. Mhm. >> We usually track to see what is the progress after that >> like for 6 months so that we can finance the successes. >> Right. >> We had a group of around 40 that went with us. >> From the last statistics around over 15 of them were able to land very good uh deals >> both becoming local representatives also trying to say how they can send uh their products there or they can come local agents for platforms because that was majorly on the IT. But the other interesting thing is what we saw within the education sector. >> We have seen part of the groups that went again because the education sector there is also quite advanced. >> Yeah. >> Started taking their children there for further education. >> But another interesting that thing that we saw is the ability of Kenyans to become e- residents of Estonia >> because there's that provision. There are five companies that already registered there >> and you get e- residency and that gives you an opening to go to the European market because from Estonia able to serve all that market. >> Again in Finland we saw the same and we met Kenyans there. We also looking ways of how they can invest in Kenya. >> We also did US two weeks later >> and the one for the US the primary focus was to challenge them on business leadership >> right >> to look at success stories. How can this business outlive you and be present for another 100 years? So we took them to Chick-fil-A where we saw a very big success. Yes. In the United States and also Florida where they able to attend the John Maxwell conference >> to challenge the thought leadership on the high level of leading a small business >> right >> that goes beyond your generation. >> Yeah. Fantastic amazing things Absank is doing. Yeah. That calls you to pay attention and visit them very soon. But also as we bring the conversation to a close, maybe what would be if you are to uh look at it in terms of policy adjustments or vouching for especially when it comes to even the central bank of Kenya, the CBK uh county and national government too as well in terms of empoweringmemes uh what would you pivot or push on board so thatmemes can thrive and be resilient? >> First I think I mentioned two that have uh that have been pushed and they have worked. Okay, >> one of them is that the Kenya bankers association through also the central bank >> asked banks to pledge their support to the MSMES >> and also have been tracking on a monthly basis how much is going towards that and if you look at the industry we've been able to surpass the 150 billion that had been pledged like two years ago >> okay >> so a lot is going to that number two that has happened is about the interest rates you can see now the loans have become affordable >> now what I think we should do better is pushing for the period to payment >> are iristracting when they apply and then you get 90 days credit period and then you go on the 90th day you are given a check that is postdated another 90 days >> those are 6 months >> when this change of regime change of leadership for any institution be it county be it national government the pinging bills and all that there has needs to be a policy also within the private sector if I supply to a supermarket >> can I be paid within a reasonable time right >> because I keep supplying every single day for 90 days I've supplied for 90 days for vegetables Right? >> So before I'm paid again, I've deployed all my capital there. >> I can't serve a second supermarket. If this one delays or something happens, then that business goes down. >> There needs to be a policy on how long it should take before the payment is done. >> Yes. >> In most cases, this one who is taking long to pay has already been paid, >> right? >> Again, let's work with a budget. Don't give these orders and loos that goes along because that's and that's why we've introduced invoice discounting just to try and bridge that gap. >> Mhm. >> Yeah. Amazing. That means it comes for the attention as well of the ministry of trade too and also even MSMES as well. Both of them have cabinet secretaries. They're fully functional dockets. Yeah. At some point have they played a role too as well >> in terms of uh bringing convergence and support tomemes? a very big one. We actually working we have so many things that we do together with them. We consult a lot and in most of these programs even as we roll them out they actually usually part of it. We work the Chamber of Commerce, the Kenya Association of Manufacturers. We have so many partners that help us bring together the solutions for MSMES, right? >> They actually our core partners, >> right? >> Yeah. >> Yes. And we are finishing up this conversation. uh how has the digital landscape in Kenya shaped uh operation of SMMES and also from ABS bank how have you guys managed to leverage on that in terms of outreach to startups >> maybe I can start with how what we've done uh part of what we've done is to use behavioral data and uh to do data analytics and predictive analytics for us to be able to make credit decisions >> we have sometimes uh occasionally we look at the data refresh it and look at what we' call pre-coding models >> and that's So when you go to the app then you find there's a limit allocated to you. >> Yes. >> This is all coming from the technology the data the AI and we able to say this person we are comfortable giving them this limit. So we pre-select some of them we preapprove >> and then it becomes easier faster and more efficient >> also helping us also to predict and help you know what is the next most available or most appropriate product that you can take based on your profile >> using the data. But the landscape the way it has changed we have seen a lot ofmemes use and also data and technology >> to be able to come up with the new products. They can easily be able to tell the direction is going. They able to manage their collections. They're able to manage their cash flows. >> They also able to do digital marketing and also they're able to reach out to other unconventional markets outside of Kenya. So all that we see even from the time you see the inflows coming and you find people are able to transact even regionally >> is present in 12 countries in Africa and part of the interest we are seeing ismemes are saying can we also start extending to these markets >> but not actually physically how do we integrate to these wellestablished ecosystems by use of technology >> remotely or virtually >> uh we've closed it I want you to look at Jenz in the eye in camera number one and let them know the goodies that are loading up in store at Absubang what they should anticipate. One who has an entrepreneurial mind and they have a vision of thriving in the theme world. What are the goodies that Abso Bank has for them? Uh camera number one as we exit. >> Yeah. Yeah. Uh for you who is looking to do your business as a new person as a as a young person. If you're looking to do your business as a young person and you want to grow your business, what we are doing at ABSA is we are looking at your profile trying to see how we can grow you as a youth because we have a youth proposition and some good things that are coming up in store. You're able to access the bank digitally. You're also able to collect your your money, your payments through the different integrations that you have for any idea that you have. And you're receiving money from all over the world. And through your receivables, we are able to give you a limit that can help you finance your business, that can help you grow your business. So every time every now and then we are doing new innovations to help you go beyond Kenya to help you go beyond your county to help you go beyond Africa because in ABSA we say that your story matters and there's no two small story we know every small story can grow to become a big story and if you create enough stories for Africa we'll be able to empower Africa's tomorrow together one story at a time. >> Yes. How can they reach out? Is there a website or a number? Yes, you can reach out to us through our ABSA um website. Uh so once you just check on that, you'll be able to see and then through our branches and also we have agents all across the country. >> Yeah. Or they can visit any of the branches in person. Yeah. And then CBD or any other part of the country. Yes. >> Yes. We have over 90 branches so they can be able to access us through that. >> Yes. And absolutely. Thank you so much. uh so many amazing things happening at Absa Bank especially for SMMES and they contribute 98% of our economy and GDP that shows that we need to do a lot of investments and root out for them and thank you so much Mr. Ras Mutura for your valuable insights on this conversation. >> Thank you so much. It's a pleasure having me here. >> Yes, >> I wish you all the best and allmemes out there. >> Yes, thank you. >> All right, we want to thank you as well for watching this segment. We're going to take a very short break. We have been speaking to Aras Madura, head of SM banking at ABSU Bank for anything he mentioned or did not mention. Please ensure that you visit the website or visit ABSA offices in person. We're going to take a very short break. The next conversation is about mental health. So you don't want to miss out with James John at 224 channel at brand second at James John. See you on the other side in just a bit.