The current era is being referred to as the information age. If you have been observant enough, you will notice that entrepreneurs are ditching the old business models and using rather unconventional ways of doing business. Regarding business, modern day companies can no longer ignore the influence of the internet in doing business. The proliferation of online based business has mainly been spearheaded by young people who are ditching the bureaucratic way of doing business.

With online based business, an entrepreneur can start operations from the comfort of his/her home. I think this is the way to go with the current problems of raising enough capital to rent expensive office apartments. The brick and mortar way of conducting business is highly expensive. However, I agree that even internet based enterprises still need offline presence, they can do this progressively as the enterprise takes shape. One of the main aspects of internet business is through ecommerce. E-commerce has gained a strong foothold in Kenya in the last few years. I will dwell with small-scale retailers. With eCommerce entrepreneurs are setting up simple websites and establishing a consistent social media presence. Through this model, entrepreneurs are identifying business opportunities and setting up shop from the comfort of their homes. All they need to do is post products online and make deliveries to customers. Of course its not all rosy because one has to be consistent and offer unique products but it also offers a wide market is properly utilized.

ecommerce offers a myriad of advantages both to business and customers. For example, the cost of doing business decreases because all a business needs is a store or a warehouse when all products are kept. Through a consistent online marketing strategy, a company can offer deliveries to customers within a specific region. Other aspects such as product customization, cheaper products, delivery and ability to offer a wide range of products are all advantages of adopting online based business. Also, use of company website and social media platforms such as Facebook, Twitter and Instagram can be avenues adopted by your business. One of the main challenges faced by this type of business is having streamlined logistics especially as the business grows. However, one can start with investment in motorcycles which can quickly navigate through traffic in the city. The business is also easy to scale if you identify the target market and offer unique products or solutions to customers. With the high usage of mobile money services such as Airtel Money, Yucash and Mpesa, the process of paying for goods and services is even easier. There are various thriving businesses in this field; from food deliveries, clothes and fashion to drinks.

There are also other methods that are changing the way people work and do business. For example, co-working is a major concept in the USA, Europe and Asia. The model works in such a way that work space is provided for independent contractors thereby creating a community of people working together but on different projects. This means that you don’t have a permanent office but you pay when you need to. The majority of the other work is done online. You can get access to office amenities such as office internet, stationery, amenities such as tea and  food  even without owning an office while working around other people who are totally unrelated. This concept provides a powerful tool for working on-the-go as well as networking. Besides, the main advantage of this model is enabling a community of freelancers to work together who share similar work values but work on different things. Such environment can offer great opportunities for startups to share and network while saving on normal start up costs. Studies show that this trend is set to grow even further.

source: Hera Hub

Co-working is mainly being applied primarily for hiring consultants or specialists in certain fields. Imagine a case whereby a company can hire specialist consultants in specific areas such as accounting, web consulting etc to undertake specific tasks when they arise. These people are paid purely on the basis of work done. Therefore, a company can save on staff costs associated with permanent employees. Only time will tell if this concept will spread globally.

All in all, i believe that the internet and technology are here to stay. The Internet offers immense opportunities even for small businesses. Unlike in the past, the internet is making the playground level for both young and seasoned entrepreneurs and it is upon us to look into ways of using it to gain competitive advantage in different aspects. Some of the things that are happening are not highly pronounced or even visible in the mainstream media, but there are people out there making it big on the internet with other things such as freelance writing, blogging and transcription. Leveraging on the internet platform can and will be the game changer in a few years time in Africa and Kenya in particular as these new work concepts spread around the world.

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I have had interest in the concept of Micro-finance since my encounter with Kuya from Kenyatta University.  Kuya was a very interesting lecturer for a unit called Economics of Micro-finance. I remember vividly how Kuya went on and on about the concept of group lending that later spread all over the world.  In brief, Mohammad Yunas started the concept in Bangladesh and encouraged people from poor backgrounds to get small loans at affordable rates of interests to improve the livelihood of poor people. This later led to formation of the first micro-credit bank called Grammen Bank. For his work in advancing this model, he won a Nobel Peace Prize in 2006.  Through the concept of micro-credit, entrepreneurs from poor background were able to get access to affordable finance that they would otherwise not have been able to get access to in traditional banking system model.

Fast forward to today, this model has been advanced to form what is the basis of modern day chamas and sacco movement. Kenya is ranked the best country in Africa in terms of number of saccos, growth, management and impact of Saccos to the common people and 7th globally. With an estimated 15,000 registered saccos in Kenya, majority of people especially in the rural areas have been able to uplift their living standards and alleviate poverty. Indeed, i believe that if we entrench the Sacco basics to the young population in Kenya, we are able to cultivate a good savings culture for people at a young age. Kenya cannot achieve its Vision 2013 without reducing the sprawling levels of youth unemployment that we are witnessing today. Given that not all people can get access to funding, ensuring that young people in the informal sector save through a well established sacco system can have a more positive impact. In rural areas, Chamas have been transforming the livelihoods of many people because they are present in virtually all sectors. People contribute as low as ksh 50 or even ksh 100 daily and within a short period of time, they undertake investments that they would otherwise not have been able to undertake. More resources in terms of member education on financial literacy could be very vital for these chamas that have grown to eventually become registered saccos.

One of the basic principles of a sacco is that one must save in order to get access to credit. Majority of the Saccos offer up to 3 times the amount of savings. Therefore consistent savings of up to Ksh 50,000 can give you a loan of about ksh 150,000. I consider the model of savings and investing through Sacco a good model because firstly it gives you that saving culture.  Imagine If someone decides to save ksh 150,000 for a project. This might take a long time. If you save ksh 5,000 every month, you can be eligible for skh 150,000 loan after just 10 months or less. However, for you to save up to ksh 150,000 it would take 30 months (If you save Ksh 5000 every month). Considering the time value of money, you can save for 10 months and get a loan to finance your small scale project. By the time you get to 30 months, your project could be on its way to success. in addition, saccos offer lower rates of interest on loans compared to banks. Majority of the Saccos offer as low as 12% interets p.a mainly on reducing balance basis. Compare that the current bank rate of over 19%.

The case of  Ubunifu Sacco  (‘Ubunifu Sacco’ on Facebook) can be used as an example of the potential that lies with youth based Sacco. Ubunifu Sacco morphed from a savings club to become registered as a Sacco in April 2015. The start up Sacco (which i am part of) was formed with the purpose of mobilizing savings from young entrepreneurs who would otherwise not get credit from banking institutions. Within a short period of time, we have been able to grow membership to 41 members currently with cumulative monthly deposits of about 1.8 million.  An amount of close to ksh 1.1 million has already been disbursed as loans since the Sacco started lending in November 2015. Currently, around ksh 500,000 is advanced as loans every month to members. Members contribute only ksh 4,000 every month. (about ksh 130 daily). The Sacco has achieved the above within a few months of being in operation, imagine what will happen a year from now if the consistency is maintained. The potential is definitely there (PS. Join Ubunifu Sacco Today, Check out the Facebook Page for details).  I believe there are other youth based saccos out there. They present a good opportunity for pooling funds that can be channeled to viable investment opportunities. Members who a year ago could not access loans from banking institutions despite having incomes, though irregular, have now the ability to borrow money to pay for school fees, fund their businesses and support their families. Members act as guarantors to each another thereby eliminating the need for elusive collateral in terms of fixed assets. There is untapped potential here and Saccos can help entrench the savings culture while turning around the living conditions of young people.

The most important aspect that can propel growth and success of youth-led Saccos is training for board and employees in terms of financial stewardship and corporate governance. This can enable the Saccos to generate enough wealth to cover operational costs. With support from institutions such as Ministry of Industrialization, SASRA, District Cooperative officers and other agencies such as Co-op Consultancy and Insurance Agency (CCIA), these Saccos can and overcome the initial start up barriers. The entrepreneurial spirit can be nurtured early enough while at the same time enabling young entrepreneurs to learn important money lessons while still in their early years of growth.

Innovativeness in Sacco products is one area that youth based Saccos need to fully exploit in order to become more relevant to young people. Services such as access to credit through mobile money services is one of them. Linking these money transfer services to back-office financial databases can lower operational costs because saccos will require fewer staff while increasing efficiency.  In addition, with right framework, Saccos can offer products such as funding of innovative start ups from  members. Switching to virtual platforms that eliminate the need for brick and mortar establishments would also be a viable avenue for growth. Integrating technology innovation and new products can be expensive for start up Saccos and therefore partnerships with ICT companies and other institutions could prove very strategic.   Its time more young people became involved in their our future rather than laying back and wait for ‘the big break’ while we can use what we have to build a more promising future. we can use the little income we get from side hustles and do bigger things. We just have to imagine big, pool funds and start small.