Building A Resilient Economy With SME and Traders Insurance: Why It’s Central to Kenya’s SME Sector

Lesile Selelo SME and Traders Insurance 0

Introduction

Kenya’s economy thrives on the back of its small and medium enterprises (SMEs), which account for approximately 98% of all businesses in the country and provide over 80% of employment opportunities. From roadside kiosks and Mitumba stalls to agribusinesses and small-scale manufacturers, these enterprises fuel innovation, create jobs, and serve as economic lifelines for millions of families.

However, despite their importance, SMEs in Kenya are constantly exposed to a wide array of economic shocks—ranging from inflation and currency fluctuations to political unrest and climate-related disasters.

As we move further into 2025, these uncertainties are becoming more complex and harder to predict. Yet, the vast majority of SMEs and informal traders operate without any form of risk protection, leaving them vulnerable to collapse when disruption strikes. This lack of preparedness not only affects individual entrepreneurs but also destabilizes entire communities and undermines national economic goals.

Insurance, often overlooked in the SME sector, is a game-changing solution for building resilience. When leveraged correctly, it offers financial cushioning, facilitates faster recovery, and boosts confidence among entrepreneurs.

In this article, we explore why SME and traders insurance is no longer optional, but essential for a stronger, more inclusive Kenyan economy—and how firms like Step By Step Insurance Agency are leading the way in bridging this critical gap.

Businessman interacting with holographic SME interface, with various icons and data, on a blue background. Concept of small and medium enterprises

Key Takeaways

Insurance is critical for shielding SMEs from economic shocks in 2025.
SMEs make up over 98% of Kenya’s businesses and deserve tailored risk protection.
Step By Step Insurance Agency offers accessible, expert support for small businesses.
Policy support and simplified insurance products will drive greater adoption.
Protecting SMEs builds resilience, jobs, and inclusive economic growth.

The Backbone of Kenya’s Economy: Why SMEs Matter

Small and medium-sized enterprises are the lifeblood of Kenya’s entrepreneurial spirit. These businesses span a wide range of industries including retail, agribusiness, technology, construction, and services. SMEs contribute over 33% of Kenya’s GDP, making them critical to economic growth and poverty reduction.

However, most SMEs operate in the informal sector, where financial management is minimal, credit is scarce, and risk mitigation is almost nonexistent. Despite these challenges, the SME sector remains remarkably innovative and resilient, which is why protecting it is of national importance.

By safeguarding SMEs through strategic insurance coverage, Kenya can secure not just individual businesses, but also the livelihoods of millions. It’s a vital move toward sustainable economic development.

The Threat Landscape: Economic Uncertainties Facing Kenyan SMEs in 2025

Running a business in Kenya has never been for the faint-hearted—but in 2025, the pressure on SMEs has reached new heights. From unpredictable weather patterns affecting agriculture to fluctuating exchange rates, rising operating costs, and shifting government policies, the economic playing field is anything but stable. For small and informal businesses that often run on thin margins and daily cash flows, even the slightest disruption can be devastating.

Kenya’s SMEs—despite their resilience—are increasingly vulnerable to a range of threats beyond their control. These uncertainties don’t just stall growth; they break supply chains, eat into profits, and force entrepreneurs to shut down without warning.

Understanding this threat landscape is the first step toward building protective strategies, and insurance is one of the most critical tools in that arsenal.

In this section, we highlight the key economic risks confronting SMEs in 2025 and why preparing for them is no longer optional—it’s essential for survival.

Rising Cost of Living and Inflation:

High fuel and commodity prices are squeezing already thin profit margins for small businesses.

Political Instability:

Periodic tensions and policy changes create uncertainty, especially around elections or fiscal reforms.

Climate Change:

Droughts, floods, and unpredictable weather patterns threaten agriculture-based businesses and logistics.

Currency Volatility:

Fluctuating exchange rates affect traders who depend on imports or operate in cross-border markets.

Insecure Business Environments:

Theft, fire, and property damage are common threats in informal markets.

These risks can wipe out years of hard work in an instant. Without insurance, many SMEs are left with no fallback plan.

The Role of Insurance in Building Business Resilience

In today’s unpredictable economic environment, resilience is no longer just a desirable trait—it’s a business imperative. For small and medium enterprises (SMEs) in Kenya, where the line between survival and collapse can be razor-thin, resilience determines whether a business bounces back from crisis or fades into obscurity.

While many entrepreneurs focus on revenue, sales, and customer retention, few prioritize a critical pillar of resilience: insurance.

Insurance acts as a financial shock absorber. It helps businesses weather unforeseen events such as fire, theft, political unrest, illness, or even climate-related disruptions. Yet, despite its transformative power, insurance remains underutilized by SMEs and traders, many of whom operate in high-risk environments with no safety net.

In this section, we explore how insurance empowers entrepreneurs to recover faster, plan with confidence, and secure long-term sustainability—making it a cornerstone of business resilience in Kenya’s dynamic economy.

Marketing manager is analyzing a marketing strategy with charts and a laptop on a table

Key benefits of insurance include:

Business Continuity:

Insurance helps maintain operations or resume quickly after a disruption like fire, theft, or property damage.

Access to Credit:

Insured businesses are more likely to qualify for loans from banks or microfinance institutions.

Enhanced Reputation:

Demonstrating risk preparedness builds trust with suppliers, clients, and partners.

Peace of Mind:

Knowing that you’re protected allows entrepreneurs to focus on growth rather than survival.

Risk Pooling:

Insurance spreads the risk across a large pool, making it affordable and effective even for small traders.

Insurance is not just a product—it’s a strategy for resilience.

Types of Insurance Products SMEs and Traders Should Consider

Every business—whether it’s a roadside food kiosk, a Mitumba stall in Gikomba, or a growing retail outlet in Nairobi—faces unique risks. These risks can strike unexpectedly and derail progress built over months or even years. For Kenyan SMEs and informal traders, the stakes are especially high because many operate with limited capital, minimal savings, and no financial fallback plan. That’s where insurance becomes not just a protective measure, but a smart business strategy.

However, insurance is not one-size-fits-all. Different types of businesses require different kinds of cover based on their size, structure, and exposure to risk. Knowing the right insurance products to consider can mean the difference between a temporary setback and total shutdown.

In this section, we break down the most relevant insurance products tailored to SMEs and traders—covering everything from property and liability to business interruption and micro-insurance—so you can make informed decisions that protect your hustle and fuel long-term success.

Fire and Perils Insurance:

Protects physical premises and goods from fire, explosions, and natural disasters.

Theft and Burglary Insurance:

Covers losses due to break-ins or vandalism.

Business Interruption Insurance:

Compensates for lost income when operations are halted by an insured event.

Public Liability Insurance:

Protects against claims from third parties for injuries or property damage.

Goods In Transit Insurance:

Covers losses during transportation of goods.

Group Personal Accident Covers:

For businesses with employees, this offers protection in case of accidents.

Micro-Insurance Products:

Affordable policies tailored for informal sector players like boda boda riders, Mama Mbogas, and hawkers.

Each SME’s risk profile is unique, and choosing the right combination of covers is essential. That’s where insurance experts come in.

Barriers to Insurance Uptake Among SMEs and How to Overcome Them

Despite the clear benefits of insurance in protecting businesses from unexpected shocks, the uptake of insurance among Kenyan SMEs and informal traders remains alarmingly low. Many continue to operate without any form of cover—leaving them exposed to risks that could cripple or completely wipe out their enterprises. But why is this the case?

For most SMEs, the issue isn’t just about access to insurance—it’s about perception, understanding, affordability, and trust. Misconceptions, limited financial literacy, and outdated distribution models have created a wide gap between what insurance offers and how SMEs engage with it.

Tackling these barriers requires more than just marketing; it calls for education, innovation, and inclusive service delivery. In this section, we unpack the real reasons behind the low insurance penetration in Kenya’s SME sector and explore practical, people-centered solutions that agencies like Step By Step Insurance are using to change the narrative—one hustler at a time.

Lack of Awareness:

Many traders do not understand what insurance is or how it works.

Perception of High Costs:

Insurance is often seen as an expensive luxury rather than a necessity.

Complexity of Products:

Legal jargon and paperwork discourage uptake.

Limited Access:

Many SMEs operate in areas where insurance services are not actively promoted.

Solutions:

Simplify communication and use local languages and in marketing.
Bundle insurance with mobile-based platforms and savings schemes.
Partner with trusted community influencers and Saccos to raise awareness.
Offer flexible payment options (e.g., weekly, monthly) through mobile money.

The Role of Step By Step Insurance Agency in Empowering SMEs

Step By Step Insurance Agency plays a crucial role in enabling SMEs and informal traders to access affordable, relevant, and practical insurance solutions. With a deep understanding of the Kenyan SME landscape, Step By Step offers:

Tailored Insurance Advice:

Helping business owners assess risk and choose the right products.

Market Education:

Through social media campaigns, activations, and one-on-one engagements in places like GMC Place Kitengela.

Access to Multiple Underwriters:

Ensuring customers get competitive and flexible cover options.

Simplified Processes:

Assisting SMEs in filing claims, understanding policy terms, and renewing covers.

Trustworthy Local Presence:

With strong community ties, Step By Step connects with real traders on the ground, speaking their language and addressing their unique pain points.

Step By Step is not just an insurance broker—it is a growth partner for hustlers and emerging businesses across Kenya.

Policy and Private Sector Collaboration: Creating an Enabling Environment

To boost SME insurance adoption, collaboration between government, insurers, and agencies like Step By Step is essential.

Suggestions for progress:

Tax Incentives for SMEs that insure their businesses.
Integration of Insurance into SME Financing Schemes, such as Hustler Fund packages.
Capacity Building and Public Education Campaigns led by county governments in partnership with agencies.
Digital Innovation Grants for InsurTechs providing low-cost insurance solutions.
Data Sharing and Risk Research to improve underwriting and product development.

Office, partnership and report feedback for laptop, proposal and research notes with document for team. Man, woman and advice for small business, collaboration and meeting for training or b2b project

Conclusion: Protecting Hustlers, Strengthening the Nation

Kenya’s economic resilience depends on how well we support the everyday entrepreneur—the hustler, the Mitumba trader, the Mama Mboga, the SME owner with a vision. In 2025, protection against economic uncertainty is not a luxury; it’s a foundation for national progress.

Insurance, when demystified and delivered correctly, becomes a powerful tool for empowerment. It allows businesses to not just survive shocks, but to grow with confidence. It also lightens the burden on families, communities, and government when disasters occur.

With the guidance of agencies like Step By Step Insurance Agency, SMEs can access the tools they need to build not just businesses, but legacies. Kenya’s future lies in its SMEs. Protecting them is protecting the nation.

Are you an SME owner or informal trader in Kenya?
Don’t wait for disaster to strike. Secure your hustle today with the right insurance cover from Step By Step Insurance Agency. Our team is ready to walk with you—step by step—towards a safer, stronger future.

Call: 0729712200 / 0716534192

WhatsApp: 0722888350

Email: info@stepbystepinsurance.co.ke

Website: stepbystepinsurance.co.ke/

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