Lack of financial skills slowing SME growth, lender warns

Many Kenyan small and medium-sized enterprises (SMEs) are struggling to sustain growth due to limited financial management skills despite increased access to credit, Oya Micro Credit Kenya has said.

Speaking during the firm's fourth anniversary celebrations, Chief Executive Officer Wycklife Ochola said a lack of knowledge in budgeting, cash flow management and financial planning continues to hinder the growth of many businesses.

"We have seen many businesses with great potential struggle not because they lack customers, but because they lack the financial knowledge needed to manage growth and maintain healthy cash flow," said Ochola.

His remarks come at a time when access to financial services has expanded significantly through mobile banking, digital lending and microfinance institutions.

However, concerns remain about the ability of some entrepreneurs and households to manage debt effectively and make informed borrowing decisions.

According to Ochola, access to credit alone is not enough to guarantee business success.

"Credit is a powerful tool for economic empowerment, but it must be accompanied by financial education. When clients understand how to manage their finances and use credit responsibly, they are more likely to succeed in their businesses and personal financial goals," he said.

SMEs are widely regarded as the backbone of Kenya's economy, accounting for a significant share of employment and economic activity. However, many entrepreneurs continue to operate without adequate financial management training, exposing them to cash flow challenges and repayment difficulties.

To address the gap, Oya Micro Credit has integrated financial literacy training into its lending model, guiding customers on responsible borrowing, repayment planning and business management before loans are disbursed.

"When people understand how to budget, track expenses and plan repayments, they are better equipped to use loans productively and avoid financial distress," Ochola said.

The lender currently serves about 20,000 customers monthly through 110 branches nationwide and has created more than 500 jobs over the past four years.

The company has also adopted technology-driven solutions, including an AI-powered WhatsApp platform that offers financial literacy content, budgeting tips and business management guidance to customers.

"Technology allows us to reach more people with financial education and support. Our objective is to ensure that clients can access information whenever they need it and make better financial decisions," said Ochola.

He noted that sustainable lending requires more than loan disbursement, arguing that financially informed borrowers are more likely to grow their businesses, create jobs and contribute to economic development.