RBSI

Are SMEs significant in East Africa?
SMEs are very critical to the economies of East Africa. They constitute 60% of all registered entities. When micro-SMEs are factored in, they constitute roughly 90% of the registered entities and contribute to roughly 40% of the GDP in East African countries.

What Role do SMEs play in East Africa?
a. Employment Generation: They are significant employers in the Agricultural, Retail, and Service
industries
b. Poverty eradication – They create income-generating opportunities for individuals and
households which reduces poverty in the region
c. They spur innovation by optimizing processes, reducing waste, and continually finding
innovative ways to do more with less.
d. They contribute to the GDP of the region through production and trade.

What are the Key challenges faced by SMEs in East Africa?

Due to their size, resource constraints, and the dynamic nature of the business environment, SMEs face a myriad of challenges Namely:
a. access adequate financing to fund their growth initiatives. Lenders perceive SMEs as high risk
and so the interest rates and collateral requirements make it difficult for them to access credit
b. competition from larger firms with greater resources, brand recognition, and economies of
scale especially in mature industries
c. Limited human resource expertise which can impede their ability to effectively manage growth
and navigate complex business challenges.
d. Regulatory and Compliance Burdens
e. Access to export markets
f. Susceptibility to disruptions related to geopolitical economic and other market conditions

As a result of the above challenges, the Majority of SMEs do not survive the 5th year, and as a result, it’s extremely important for SMEs to constantly self-evaluate to identify potential risks and proactively develop mitigation measures.
How can SMEs self-evaluate their ability to continue into the unforeseeable future without
curtailing materially their operational activities?
At Ronalds Africa, we have developed a free tool called the Ronalds Business Survival Index that
allows organizations to self-assess and understand their business’s strengths, weaknesses, and areas for improvement which are crucial for long-term success.

The RBSI is anchored on 5 key aspects:

• Financial leadership excellence
• Human resource
• Governance and leadership
• Marketing Management
• Technology and Innovation

As indicated, the RBSI is a free tool that can be accessed on our website. By using this tool, you’ll gain valuable insights into your business’s current status and receive personalized recommendations aimed at driving growth, professionalism, and sustainability.

Tune in to the next series where we will take a deep dive into each metric above.