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LETTERS: The challenges that face local enterprises




LETTERS: The challenges that face local enterprises

Success and failure of firms is hinged on various factors. FILE PHOTO | NMG 

There are many challenges that encumber Micro, Small and Medium enterprises (MSMEs). Besides being one of the most promising categories of businesses in the country they do have mountains of challenges they grapple with. A story that appeared in the Business Daily newspaper recently on Ebrahim Supermarket made a depressing read.

I have had knowledge of this niche brand since I started reading newspapers all the way in the 1980s and 1990s when I was in the formative years of schooling. Their adverts on household items and back- to- school offers are quite reminiscent in my mind. The supermarket or the business is no more after the founder and owner Ebrahim Nurali threw his hands up and closed it and paid his employees their terminal dues.

Moreover, part of the stories made some depressing note that some dishonest ex-employees (as after they had to leave after closure) colluded to fleece the supermarket and financial imprudence led to the retailer’s fall according to some of them.

Fraud, poor hiring practices, relationships issues, customer cheating especially on debts, poor strategies, failure to manage growth, cheating on business partners, poor adherence to regulations are some of the challenges facing many businesses in Kenya and in many places in the world.

The success and failure of MSMEs are hinged on various factors and key among them is control of various risks of which the aforementioned are amongst them. That many businesses end up closing as a result of these problems is not in doubt.

That besides the challenges that afflict the market such as of Kenya with a challenging economy and inadequate demand to sustain many business startups and established ones, there is a problem with general management, controls and risk management.

Fraud is a big killer of business. Whether perpetrated by employees, joint owners, partners, suppliers, government officials, customers or any member of the society interacting with the business, it is a big danger. Yet still as a country and all countries in the world need numerous good MSMEs are needed to grow or to recharge the economies.

These businesses absorb a lot of labour and helps address the job shortchanges experienced in many countries of the world. In Kenya unemployment is increasingly becoming a time bomb. Unemployment is one of the key risks in sustaining Kenya as a viable state in the long term.

So we can’t afford to have the high attrition rates of businesses and sustain a viable economy and essentially a decent state. At any rate already the attrition rate of MSMEs due to economic factors is already high with many failing within the first three (3) years of existence. So if you add the numerous internal problems that plague them, you will find many have little chance to thrive in the long run.

I have related or interacted with various kinds of businesses and business people for long to know much. I have also dabbed in several types in various capacities and seen much. What I can confirm is fraud of various types is a big danger to many businesses. There are some businesses in Kenya that as an owner if you are not involved in day to day activities you may not succeed. Some of these if you want to be hands off a bit have to be of significant scale that you can afford to get the right technologies, systems , structures and personnel to safeguard your business especially from fraud by servants/workers.

These are particularly in businesses where cash handling is heavy or rapid at the point of transactions and easy to hide by the handlers such as with matatus, butcheries, pubs, barber shops, salons, garages, retail shops and virtually most of cash based businesses.

Other business by nature is easy for employees to steal your clients as in some of the service industries that include tour companies. It is particularly acute in terms of stealing clients in service industries. There are those made easier if you work in groups or Sacco kind of arrangement to militate against various risks which inevitably include theft by servants (fraud).

Fraud has many forms and it has the debilitating effect of destroying even the solid of businesses. Moreover, fraud is not just a problem of MSMEs, it also afflict big businesses or large companies for that matter. Corruption which is variously reported on government institutions and corporations is also a form of fraud.

Therefore point of note is that entrepreneurship is good and necessary but also there are prudent risk management mechanisms and practices required.