For most hustlers, sourcing for capital to either start or expand their businesses can be an uphill task. Official reports have shown that about seven in 10 micro, small and medium enterprises (MSMEs) have got their capital from either their own savings or borrowed from friends and relatives. However, getting your relatives or friends to advance you enough cash for your business can be difficult.
This is where the Government comes in. If you are thinking of starting a small manufacturing business, you can secure a loan from State financial institutions. According to the recently released Economic Survey 2017, last year, Kenya Industrial Estates (KIE) Ltd approved 325 manufacturing projects.
In total, Government-affiliated financial institutions advanced loans worth Sh165.2 million to micro and small enterprises in the manufacturing sector. Micro enterprises are defined as those with between five and nine employees, while small enterprises have between 10 and 49 employees. Last year, KIE, which approves and finances micro, small and medium enterprises (MSMEs) loaned out a total of Sh165 million up from Sh120 million in 2015.
We look at 10 of the sectors that had the highest loan approvals in 2016.
Since time immemorial, few businesses have been as lucrative as those dealing in food. It is, after all, one of the most basic of human needs. It was no different last year when KIE approved about 107 projects that sought to manufacture food products. This was an increase from 75 projects in 2015. Similarly, loans advanced to this manufacturing sub-sector went up from Sh28 million in 2015 to Sh66 million.
Fabricated metal products, except machines
There are so many metal structures that can be built through cutting, bending and assembling, a process known as metal fabrication. These include water pails, wheelbarrows, sufurias and those metal boxes a lot of us took to boarding school. A total of 81 projects were approved in this sub-category, an increase of 52 per cent from 53 projects in 2015. The value of loans advanced also went up from Sh25 million to Sh39 million.
Woven fabric can be used in a number of ways, including and perhaps the most important, making clothes. But fabric can also be used to make window curtains, covers for sofa sets, kitchen towels, and so on. There were 65 projects aimed at making woven fabric that were approved in 2016, up from 37 the previous year. Credit to this category amounted to Sh20 million up from Sh12.8 million.
Products of wood, except furniture Gift boxes, sugar bowls, cooking sticks, sculptures, picture frames, pencils, crayons … the list of products made of wood that do not include furniture is pretty long. And the variety of opportunities, particularly with bamboo becoming more popular, has drawn in more entrepreneurs. The Government approved 22 projects in 2016, up from five the year before. A total of Sh12.6 million was advanced, up from Sh3.3 million in 2015.
Print and reproduction of recorded media
It is campaign season, and printed materials are going to be very critical for politicians keen to publicize themselves. If you have a printing company, perhaps this is the time to apply for a loan from the Government for expansion. And with the advent of digital broadcasting and an era where content is king, the demand for the reproduction of recorded media is getting higher. If you own a recording studio, opportunities abound for you.
This category includes businesses the churn out, among others, audio tape recordings, CD (music and sound) reproduction from master copies, DVD (music and sound) reproduction and software reproduction from master copies. Last year, 16 print and reproduction projects were approved, with Sh9.8 million advanced.
Leather and related products
Leather is a key focus area for the Government as it seeks to boost the manufacturing sector. Its uses range from belt and shoes to seat covers and jackets. However, while just two projects in this sub-sector were approved last year, similar to the year before, the loans advanced increased from Sh1 million to Sh5.3 million.
It’s common these days to come across displays of beds, seats and cabinets along major roads in the country, with some of these informal set-ups rivalling more established outfits. But even as furniture-making attracts more entrepreneurs, it appears few of these business owners are going for loans. There were fewer furniture-making projects approved in 2016 compared to 2015, with just 13 projects approved last year. In 2015, 27 projects were approved, with loans worth Sh13.6 million advanced. Last year, the projects drew out Sh3.8 million.
The business of making clothes is a lucrative one, but it has yet to reach its full potential locally for a number of reasons. There have been attempts by the Government to give this sub-sector a boost by, among other things, making the importation of second-hand clothes more difficult and encouraging the ‘Buy Kenya, Build Kenya” initiative. Last year, however, KIE approved just one project dealing in wearing apparel, which was similar to 2015. Loans advanced to the sub-sector, however, increased from Sh500,000 to Sh1.7 million.
This includes sand, gravel, stones and clay. Using processes such as grinding, mixing, cutting, shaping and honing, these minerals are used to manufacture products like ceramics and bricks. They can also be used to manufacture glass. In 2016, this sub-sector had five projects approved, down from seven that drew financing the year before. The value of the loans advanced also went down dramatically from Sh7.6 million in 2015 to Sh1.7 million last year.
Chemicals and chemical products like pesticides, plastics, synthetic rubber, coatings, paint, soap and detergents, fertilizer, cleaning and polishing preparations, and so on fall under this sub-sector. Three projects in this area were approved last year, up from two the year before. However, the value of loans advanced reduced from Sh18 million in 2015 to Sh1.1 million.