Gov’t SME targeted interventions fail to hit home


Gov’t SME targeted interventions fail to hit home
President Uhuru Kenyatta speaks at the Strathmore Business School where he attended a forum on the growth of SMEs on October 16, 2018.

In Summary

  • The lesser than desirable SME score-card is attributable in large parts to the lack of effective MSME representation in policy decision making even as the country fairs dismally in enhancing market linkages for small businesses and low entrepreneurial skills development.
  • The findings serves to shade the government’s own promise to the informal-sector businesses and further casts doubt to the State support for the bulk of Kenya’s working population.
  • Over 14 million Kenyans draw their livelihood from SMEs with their combined contribution to Gross Domestic Product (GDP) being estimated at an annualized 30 percent.

The State-initiated interventions targeted at micro, small and medium enterprises (MSMEs) have failed to gain much ground as the sector’s regulatory environment remains less than favorable.

A new index by the Kenya Private Sector Alliance (KEPSA) rates the mean policy indexes at a score of three out of five to sit below the global best practice count of four.

The lesser than desirable SME score-card is attributable in large parts to the lack of effective MSME representation in policy decision making even as the country fairs dismally in enhancing market linkages for small businesses and low entrepreneurial skills development.

“Half of the policy dimensions have moderate or neutral impacts to MSME development,” reads part of the index.

The findings serve to shade the government’s own promise to the informal-sector businesses and further casts doubt to the State support for the bulk of Kenya’s working population.

SMEs have generally failed to sit at the table of decisions as the majority of the surveyed responses expresses the lack of regular consultations on laws with a direct effect to them.

Further, the micro-enterprises have marked a low uptake to SME tailored funds as the business are forced to yield to expensive credit.

Moreover, the government’s regulatory policy has failed to distinctively break up players into differentiated segments while there exist no strategy to link the sector to the economic transformation agenda.

Nevertheless, the SMEs have found positives from the ease of access to imports in an affair largely bolstered by their alignment to existing infrastructure.

The KEPSA index recommends the actualization of the sector’s tailored funds and the establishment of an industry specific department at the Kenya Revenue Authority (KRA) to address regime and compliance related issues.

Additional recommendations include the embedding of deeper consultations between players and government and the setting up of technology demonstration sector to embolden the SME skills set.

Some of the targeted interventions have failed to take off with Members of Parliament for instance rejecting the amalgamation of the Uwezo, Youth and Women Fund to form the Biashara fund.

At the same time, however, the government has had its way with propping the sector, with the same MPs voting to stand by the President’s stance on the repeal of interest rate caps to support credit flow to the private sector entities.

Over 14 million Kenyans draw their livelihood from SMEs with their combined contribution to Gross Domestic Product (GDP) being estimated at an annualized 30 percent.

In 2018, the sector a lump sum 83.6 percent of the net 846,000 new jobs created in the economy.

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Story By Kepha Muiruri
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