Virtual Companies Come to Life: How New Methods in Student Training Can Build Sustainable Entrepreneurship in Kenya
According to Kenya’s development programme Vision 2030, one out of every three household businesses is led by a young adult. With only 7 percent of all high school graduates finding formal employment, small household businesses are a natural choice for young people entering the job market. Still, up to 70 percent of these businesses go bankrupt annually due to their lack of entrepreneurial skills – such as financial management, marketing and planning. The same deficiency prevents young entrepreneurs from accessing capital from demanding lenders.
The problem is deeply rooted in the educational system, which focuses primarily on rote learning instead of practical skills. This problem, however, is not limited to Kenya – many OECD countries are facing the same challenge. Kenya’s unemployment rate stands at around 40 percent and since formal employment in Kenya is diminishing, the impact of small businesses on the country’s economy takes on greater significance. Therefore, ensuring that entrepreneurs stay in business is key to securing economic growth. So how can students gain the experience and skills necessary to lead their businesses effectively and sustainably?
Integrating virtual (or “training”) companies into education could be one answer answer. Sote ICT, a joint project of the Pontis Foundation in Slovakia and Kasigau Wildlife Trust in Kenya, focuses on the development of entrepreneurial skills in students at 12 high schools in southeast Kenya through this method. Since its inception three years ago, this project has educated more than 500 young people. Training companies, also called “practice firms,” are weekly extracurricular activities – essentially an alternative to sports or music clubs.
Training companies give students hands-on experience by simulating a real business environment. Participants choose their own businesses, supported by trained teachers. The virtual companies replicate all functions of a real firm – from production to marketing, sales, customer relations, accounting and human resources. The students create business plans and are provided a small budget to fund their products. Even though the firms are not real, the simulation requires the students to approach the game seriously. Participants in the training companies hold specific jobs within the departments, which, just like real jobs, come with tasks and responsibilities. The simulation allows students to solve dynamic tasks, such as various business cases when the goods and services are sold to fictitious customers, or the firms work as a cluster and trade amongst each other.
Training companies give students an opportunity to learn from their mistakes, to be creative, and test their ideas without the risk of real financial loss. Teachers, classmates and the training company network all serve as the testing ground for their ideas. By the time the graduates leave school, they know how to set up a business, how to manage a company and how to attract customers. Through the process, they develop both the hard and soft skills necessary to succeed in business today.
The Sote community consists of 28 training companies representing different sectors, such as tourism, beauty, agriculture, tailoring, information technology and many more. Students from Marungu High School have established a practice bank, Mshindi KCB, through which they learn how to set up accounts and how to access loans. The students didn’t just keep the knowledge to themselves – they put together financial literacy training, and now they travel around neighbouring schools educating their counterparts. “The children also teach these things to their parents at home. The parents then apply the knowledge when saving money for school fees, or applying for microloans to invest in their businesses,” explains the deputy principal of the school.
Girls from Murray High School in Mwatate established a fashion design company, fighting beauty stereotypes through their marketing. As a part of their corporate social responsibility strategy, they started a practice charity to help strengthen the position of albinos in the society. Some training has traversed the virtual world and has started attracting real customers. Most of them sell products to their own schools – they create brochures, calendars, take care of school gardens or shoot videos of school events. Girls from Kajire sell their accessories and handbags to both fellow students and people in their communities.
Besides the successes of training companies, there are many inspirational stories of program graduates. I have tracked a number of students who have started small businesses and cite the training company experience as the main driver of their success. Harry, a graduate from Mwangola, started his own bakery and says that skills acquired during studies have enabled him to attract twice as many customers as his competition. “Customer preference research and active marketing are the secrets,” he says. Geoffrey from Moi has joined an ICT company, which developed content management systems for all the schools in the project. He is now working on an eHealth mobile application to ease access to health services.
As our graduates have recently completed the program, evaluation of the project is under way. Together with our students, we have been learning by doing. As with all school activities, sometimes we encounter student apathy, which results in lower quality and intensity of work. We found that a key factor affecting students’ ability to learn, and hence the effectiveness of our project, is motivation. At one of our schools, for example, the program started losing members to sports clubs within a few months and the rest of the students approached the activities passively. Our team visited the school more often, while always highlighting the practical benefits of participation, and how they could help advance students’ businesses in the future. We explained the purpose of each school project and every activity in detail and what they were supposed to learn from it. As a result, activity in the club rose by 40 percent in the subsequent two months, and student attrition virtually ceased. This experience taught us how important it is to make students understand the aim of anything they do. Seeing real meaning in the tasks, they gave their best. Since then, we have worked to ensure that all the students are taught the benefits of entrepreneurial education by their teachers and our team members. Even the students who do not intend to start their own businesses benefit from their involvement in a virtual company. They acquire important working habits, skills and experience which may enhance their CVs when applying for jobs.
Besides training companies, Sote ICT also focuses on making ICT accessible to more than 5,000 students, improving their ICT skills to use in entrepreneurship or as a comparative advantage for the job market. We develop these skills in educators and learners alike through equipment and software donations, continual training, cooperation with school management and the establishment of student IT clubs. The newest challenge is a launch of a start-up hub, which will provide mentorship, co-working space, training and also limited funding to support the most innovative businesses.
We expect many more training companies will come to life. The young entrepreneurs have already tested their ideas in a simulated environment, and now they are going to work hard to make it in the real world.
Top image: Students from Mshindi KCB at Marungu High School practizing customer service during the first Trade Fair in April 2015. (All images courtesy of the Pontis Foundation.)
Ivana Ulicna is a Pontis Foundation project coordinator for its educational business-based program in Kenya.