Why Kenya’s Business Grants Fail to Sustain Long-Term Growth

The three-year study tracked 12,000 applicants to determine whether capital or selection processes matter more for business survival. While larger grants of US$36,000 sparked immediate employment spikes compared to US$9,000 awards, these gains evaporated for many firms over time. Businesses chosen through a rigorous, multi-stage selection process maintained steady growth regardless of the grant size, whereas those picked via streamlined screening saw their initial momentum collapse within years.

Prioritizing Selection Over Capital

Financial constraints are rarely the only hurdle for emerging firms. Data shows that grant recipients across the board spent funds on operational basics like wages and inventory rather than transformative investments. Because additional funding yielded diminishing returns, the cost-per-job for larger grants soared to US$13,672, nearly triple the US$4,438 cost of smaller, better-targeted awards. For policymakers and investors, this suggests that redirecting budgets toward robust screening, mentorship, and management training produces far more resilient results than simply increasing the check size. Ultimately, the ability to convert capital into sustainable expansion depends on the entrepreneur’s capacity rather than the volume of liquidity provided.