Tracking business funding in Kenya

Over time, there have been many initiatives mainly by the government to tackle youth unemployment in the country. Examples of these initiatives are:  Kazi Kwa Vijana, Youth Enterprise Development Fund, Uwezo Fund etc. A huge amount of money has been allocated towards funding young people to undertake businesses. However, there are very few success stories. why?

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Aside from corruption whereby such money is stolen, I also think the manner in which such programs are set up contributes to failure. One of the earliest attempts to funding businesses in Kenya was through Kenya Industrial Estates (KIE). Established in 1967, this corporation was the government’s first shot in offering funding for SMEs and they did exactly that in their early years of operations.  Royal Media honcho S.K Macharia was one of early employees at this corporation and they did a good job in setting up important structures to ensure the body played its role in providing jobs and nurturing entrepreneurial spirit shortly after independence. The body was set up in such a manner that an individual would come to the corporation and tell the officers about the intention to start a certain business, mainly manufacturing related. The corporation would then research if such product exists and whether it was viable to produce the said products in Kenya. Being in the early years of formation of a nation, there were many opportunities to exploit. The officers would then conduct a feasibility study and within a short period of time, money was advanced for initial set up costs. The corporation played an important role but over recent years it has been labeled as a sleeping giant with hope to revamp and take its meaningful role once more.  Revising its structures to match modern business demands is crucial for its survival.

There was  also  a graduate loan scheme being offered by Pan African Bank and thereafter KCB in the early 1990s. University graduates who wanted to pursue business related activities would easily get loans for start up. In addition, there was a scheme by Kenya Management Assistance Programme (K-MAP) which was established in 1986. This scheme was adopted in order to help SMEs tap into into skilled human resource management of large corporations based in Kenya. The large corporations offered managerial as well as technical training to start ups.  This was a good way of offering SMEs training in relation to aspects of financial management such as cash flow, marketing and human resource management. These skills are important for SMEs and contribute to success or failure of a start up.  Fast forward to 2003, came the Narc government with new initiatives to tackle youth unemployment. For example, kazi Kawa Vijana aimed at providing young people with job opportunities related to digging trenches, clean up initiatives, road construction and other manual labor kind of initiatives. The project was intended to create about 200,000 jobs. I don’t think it managed to achieve its objective and even if it did, the jobs provided were only temporary.  Audit from the World Bank revealed that issues related to: poor internal controls, irregular transactions, improper payments and allocation of funds to ghost projects were some of the causes for the collapse. However, I also don’t think the framework was properly thought out before being rolled out. I believe it is the same story with Youth Enterprise Development Fund. Generally, the approach of telling people to organize themselves into groups and then offer them funds to start a business is a tricky undertaking. I tend to think that previous initiatives that aimed at offering business support, scenario analysis and training were more effective than the current ones. This is because starting a business is simple but running it is a whole different ball game.


My thinking is that incubating of projects, providing training, expertise and support throughout the initial stages of start ups are some of the more sure ways of reducing the high rate of failure of such initiatives. Many business fail because of lack of skills to manage cash flow, management of human  resources, marketing and strategy. Indeed the trend of start up incubation is already picking momentum with bodies such as NaiLab and iHub.  In addition, the Manu Chandaria Business Innovation and incubation center is a noble initiative. More public-private sector partnerships would also go a long way to ensuring more support for SMEs. I know of other initiatives that aim to bring young people to share and learn from each other. There should be more platforms that bring people together to share ideas, strategies not just in business but also other social issues that are of importance. Such platforms offer support and enable people to learn about things to avoid and how to ensure their business or ideas survive. Platforms offered by  organisations such as Arena Kenya are important in bringing young people together to share, interact and learn from each other. The discussions, ideas and environment offered by such institutions and platforms are all crucial for people to learn. Constant learning of new practices and skills is one of the sure way of ensuring ideas and new initiatives survive.




Published by chris makubi

I am Chris. Welcome to my blog. I am passionate and write about all things startups, technology and personal learning. I fancy myself a tech/startups curator. Trying to understand technology, markets and communities and building things around that. Also want to travel more and rookie adventuring investor. wish me luck.

4 thoughts on “Tracking business funding in Kenya

  1. Wooow!! I 100% agree with you Chris. However its high time the youths to start stepping out of their comfort zones. As much as the government comes up with different projects there is still that quiz if “they are ready to be helped??” We are surrounded by opportunities but its only less percentage they seize and grab them.. some have bigger ideas and visions but too afraid to blow them out. As you suggested platforms like Arena Kenya can help in building confidence to the youth and interactions of ideas and dream. Two heads are better than one!!


  2. Hello, your post captures very deep insights I have never before thought about, such as the historical development of youth and entrepreneurial funding in Kenya. Noticeably however, your post is riddled with a few typos that might benefit from a quick fix, especially using i, instead of I. More seriously though, I think you have wonderfully achieved your aim of tracking the business funding in Kenya, especially for SMEs and the youth, I wish you could also add a few links and references to some of these arguments. .
    Additionally, I totally enjoyed the flow of your thoughts, spot on! In fact, I was hoping to read more about why the business incubation efforts failed, and you only mildly criticized them. Maybe your next article could thoroughly criticize what each of these institutions did wrong? and how newer funding can improve to create better opportunities for the youth. GREAT WORK!


    1. Thank you Mr. Frank. I got information from various sources and i hope i will be able to provide links in future; big up for the keen eye too, i will fix the typos. I wanted to keep it short but i will keep expounding on these areas in future articles, keep it here.


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