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Follow the Money

Edited on April 6, 2017

Last week’s budget was declared as a win for all Kenyans. Most people looked to emphasize the gains made for the “common mwananchi”, ..not a very favorable term just so you know.

However, for the trained eye, high potential growth areas are easily discernible. This goes beyond the reduction of the price of unga and bread, we need to look at the things hidden in plain sight.

The budget statement was delivered to the National assembly on 30th March 2017, by Mr. Henry Rotich, Cabinet secretary for the National Treasury. It was the first Budget in Kenya’s history to be presented before the month of June. This was brought forward due to the forthcoming elections scheduled for August 8, 2017.

The budget statement dubbed “Creating jobs, delivering a better life for all Kenyans” kind of tells you the direction the allocations would be taking. It being the last budget of the current government, a lot of punditry has emerged declaring it as a ploy to butter up voters. Say what you will, some imaginary neon lights are glowing in other areas as well, look closely. 

In his statement, Mr. Rotich said “Kenya’s economy is growing at twice the pace of global growth and more than twice that of Sub Saharan Africa. We are also growing faster than both Nigeria and South Africa, whose growth is projected at 0.8 percent in 2017 for each country.”

Hold up, wait a minute, let’s think through this. This means that Kenya is gaining much economic traction at present right? All of these gains are being made and we haven’t yet commercialized our oil and some mineral reserves, right? How many insertions can one single entrepreneur make in such an expanding economy? The answer is numerous ones.

The mind block or limitation that comes to such an entrepreneur here is the fact that even if they overcome the “lack of performance hurdle,” there is the “lack of financial muscle” to tender for jobs that exceed their current capacity. Talk about being caught between the proverbial rock and a hard place. Most entrepreneurs give up on undertaking seemingly large jobs because they assume that getting credit is a tedious and overdrawn process.

It is true, most banks will look at your historical record keeping in order to project your future returns. This is a given, any smart person will do their due diligence before lending to you, key word here is being smart. The business environment is changing however and the smart entrepreneur needs to also do their due diligence and realize that banks are now restructuring their approach to lending…., enter in, the trade finance solutions.

The limitations are now off. The Trade Finance solutions are customized by your bank to enable you function at potential level, not just at your current capacity. Understanding what your bank can do for you makes the difference between always bidding for Shs 500,000 tenders and scaling up to Kshs 50 million and beyond. There is therefore a measure of freedom in understanding your own capabilities and the partnerships you can make with your financial institution. A good banker helps you realize the potential of your business, given you adhere to good business practices of course.

Baba nani said, “follow the money and you will see what you are passionate about.” Baba nani is a colloquialism for wahenga walisema in case you were wondering. Re-read the budget once again and follow where the money is being allocated. Maybe, just maybe, your next big break will come from understanding it. You are welcome to talk to us, our doors are always open.

By: Isaac Kingori Mwangi


The writer of this article is a Senior Manager, Corporate Banking and Trade Finance at Credit Bank.

 

Categories : Business Advice

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