I recently attended a thought-provoking webinar on funding opportunities for Small and Medium Enterprises (SMEs) in Kenya. The panel featured a diverse group of presenters who delved into a range of topics including bank loans, Savings and Credit Cooperative Societies (SACCOs), Capital Markets, Government Funds, and Credit Guarantee schemes. Each speaker brought valuable insights into the different avenues available for SMEs to secure funding and grow their businesses.
However, the conversation took a surprising turn when a participant asked about the possibility of raising funds from donors. The response from the panel was rather disheartening: the participant was told to focus on her customers and not rely on donor funding. As someone who actively raises funds for SMEs from donors, I found this advice troubling. It’s a misconception that donor funding isn’t a viable option for SMEs, and there are indeed opportunities available, especially for organizations that are socially or environmentally inclined.
For example, there are several donor-funded programs specifically targeting SMEs in Kenya:
📍The MasterCard Foundation's SME Fund: This fund provides financial support to SMEs with a focus on job creation and skills development.
📍USAID's Kenya Investment Mechanism: This initiative works to increase investment in Kenyan SMEs by connecting them with investors and providing technical assistance.
📍The Global Innovation Fund: A social impact investment fund that supports SMEs with innovative solutions to global challenges.
📍The Kenya Climate Innovation Center (KCIC): Supported by the World Bank, KCIC offers funding and support to climate-focused SMEs.,
📍Among many others
The panel’s dismissal of donor funding seemed to stem from the perceived burden of reporting and the need to demonstrate impact. But what’s wrong with that? Accountability and impact measurement are crucial elements of responsible business practices, particularly for enterprises that aim to make a difference. While I agree that it’s important for SMEs, especially those not operating as social enterprises, to have a plan to transition from donor funding, it doesn’t mean that donor support should be entirely off the table.
In fact, for many SMEs, especially those starting out or working in sectors with significant social or environmental impact, donor funding can be a lifeline. It provides the necessary capital to scale operations, innovate, and reach new markets without the immediate pressure of high-interest loans or the dilution of ownership through equity investment.
In conclusion, while the webinar provided excellent insights into various funding options, I believe it missed an opportunity to fully explore the potential of donor funding for SMEs. Yes, it requires diligence, transparency, and a clear demonstration of impact, but these are qualities that can set an SME apart and lay a strong foundation for sustainable growth.
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