WORLD BANK GROUP by Keziah Muthebwa and Morris Muchemi

What is the World Bank?
World Banks is a public international financial institution with membership of 185 countries who are also the shareholders. The shareholders are represented by a Board of Governors, the ultimate policy makers at the World Bank. The governors of the bank are member countries' ministers of finance or ministers of development and they meet once a year at the Annual Meetings of the Boards of Governors of the World Bank Group and the International Monetary Fund. The five largest shareholders are France, Germany, Japan, the United Kingdom and the United States.

OPERATIONS
World Bank provides loans and credits to developing countries - for projects that alleviate poverty. The Bank’s lending to governments is done through the following bodies:

	International Bank for Reconstruction and Development (IBRD)
	The loans are made with favorable interest rates and rather long repayment schedules.
	International Development Association (IDA).
	IDA credits are extended to the poorest of the poor countries at no interest, with very relaxed loan repayment.

WORLD BANK GROUP
The word Bank is made up of the following institutions:

	International Bank for Reconstruction and Development (IBRD)
	International Development Association (IDA)
	International Finance Corporation (IFC)
	Multilateral Investment Guarantee Agency (MIGA)
	International Centre for Settlement of Investment Disputes (ICSID)

INTERNATIONAL FINANCE CORPORATION (IFC)
IFC has identified the following as the major challenges SMEs face in Africa;

	Inadequate Financing
	Inadequate management capacity
	Unreliable market information
	Non-conducive business environment

The SME Solutions Center which is a product of IFC offers services to SMEs in Four Broad Pillars;

	Access to Finance – They facilitate access to capital in the following forms
	- Risk Capital Fund – In this form IFC extends loan to the entrepreneur (Debt), inject capital in way of buying shares in the business wit a clear exit strategy and lastly (Equity) and lastly a hybrid of the two (Quasi Equity).
	3rd Party Fund manager – Business Partners International.
	Capacity Building and Technical Assistance
	- Advisory and Enterprise Support Services on cost recovery basis whereby a need analysis is carried out in the business then appropriate technology implemented.
	Access to Information
	- There market information Databases, and Sector studies reports in the resource center.
	Business Enabling Environment
	Support Advocacy for business and investment friendly environment with the governments through and collaboration with umbrella bodies like KEPSA and Manufacturers Association of Kenya.

SSC Target Market
SME Support Center targets formally registered SME’s with the following broad characteristics.

The following resources are available to the SME’s

	Team to provide Capacity Building, Technical Assistance funds, and Risk Capital Funds.
	Hi-Speed/Broadband Internet Connectivity.
	ICT resource/business center
	Digital and text-based information data-bases.
	Business Incubators.
	Training and Conferencing facilities.
	Professional back-office support team.

IFC works in collaboration with the following

	International Organisations, Direct Foreign Investments and others.
	Other IFC programs e.g. Growth Oriented Women Enterprises
	Local Financial Intermediaries e.g Barclays Bank of Kenya Small Business Club, KREP Bank, Commercial Bank of Africa, CFC, etc
	Consulting firms, and Technical specialists.
	Industry Associations e.g KAM, KEPSA, KIM, etc
	Regulators and policy-makers, government ,etc

SSC INCUBATOR PROGRAM

	Some history and facts about incubation
	Global Perspective
	Incubation: Economic Development Strategy or Investment Strategy
	The incubation process
	SSC Incubation

Business incubation is a business support process that accelerates the successful development of start-up and fledgling companies by providing entrepreneurs with an array of targeted resources and services.

Origin
The term “business incubator” gained popularity in the media with the explosion and subsequent demise of so-called Internet incubators between 1999 and 2001, but the business incubation model traces its beginnings to the late 1950s in the USA.

Why incubation?
Business Mortality
On average, businesses that begin in a business incubator environment enjoy an immediate post-incubation business survival rate of 84% and demonstrate higher than average levels of growth and sustainability. Over 75% of businesses that start in incubation projects are still in business after five years compared to the average business survival rate of 33% over the same time period.

Job Creation
Publicly supported incubators create jobs at a cost of about $1,100 each, whereas other public mechanisms often cost more. Every 50 jobs created by an incubator client generate another 25 in the community (Source: 1998 Business Incubation Industry, NBIA)

Figures and facts about incubation

There are two significant driving forces that distinguish the various approaches to business incubation. Incubators are setup to:

	to achieve local and regional economic development goals with a social return on investment through the generation of jobs and businesses,
	to generate profits for the incubator operator(s) and investors.

Examples of incubators in Kenya

	Kenya Industrial Estates
	EPZ Business Incubator Project
	KeKoBI
	SME Solution Center

STAGES OF INCUBATION

The following will be available for the SMEs’

	One – stop shop ( H/light 4 pillar strategy)
	Physical infrastructure offered ( Broad band, telecoms, printing, front/back office, furniture, conferencing etc)
	Business Advisory Services (business plans, strategy, business /product development , skills development -training, networking, cross fertilization, finance raising)

Contacts
SME Solutions Center (SSC Kenya)
International Finance Corporation
1st Floor, Africa Re Centre, Hospital Road, Upper Hill
P.O Box 30577- 00100
Tel: 254- 20 -2805000
Cell: 254 722 209781/84; 254 735 826298/97
Email: info@ssc.co.ke; Website: www.ifc.org
Fax: 254- 20 -2730589
Nairobi

Comments

Is Kenyan economy enabling for business and investments?
The economy is not at best but a lot have changed and is favourable for many businesses. It is paramount for the entrepreneur must play their part in assessing the economy before implementing their business idea.

It seems the World Bank is competing with local banks and other financial institutions.
The World Bank is not in competition with the local banks because the IFC lends high risk business and they can lend against the cash flow, the experience in the field, market, product, proven track record.

Is there a forum to support upcoming entrepreneurs and help them think through their business idea?
There is an online business plan disposal for comments at www.kenya.bidnetwork.org . In the future IFC will organise workshops/seminars on business planning and other related issues.

The GOWE has line-up seminars later in the year.

You have said there are 14 incubatees at the moment – is there room for more?
Yeah there is room for 5 more.

What the cost of developing business plan?
The best way is to send request so that can source quotation from the database of consultants put in place by IFC. Generally the consultants will charge Kshs. 50000 and above.

What the cost of incubation services?
The incubation services are paid services costing about Ksh. 10000 to 20000 and it takes about 1-2 years for the incubation process.

BACK TO EVENTS