Development of the private sector currently should be encouraged, and more so in Africa where a modern wage job is rare opportunity to come by. The inroads made by the private sector so far in insurmountable, it has created jobs to most the youth in the formal and informal sector alike. The informal sector has grown in stature though it’s riddled with poor policies from the government coupled with the lack of necessary skills needed by the entrepreneurs to fully take part in this sector. MSMEs are an integral part of the Kenyan economy. Per the Capital Markets Authority of Kenya (CMA), MSMEs offer
employment to an estimated 7.5 million people, account for 80% of employment, and contribute over 92% of the new jobs created annually. Research indicates that MSMEs contribute about 45 per cent to Kenya’s GDP
Policy makers and generally economists concur that MSMEs are a central link between poverty reduction and the private sector. The sector is labour-intensive and employs mostly youth and women and therefore helps to distribute incomes across participating actors and hence facilitates equitable distribution of resources. The support of MSMEs will lead to sustainable employment opportunities and incomes for most people in the country. They will also have the potent to gain inroads into the East African Community (EAC) market.
Despite the enormous contributions to the Kenyan economy in terms of employment, incomes, and output (GDP), the sector faces a myriad of challenges that needs to be surmounted if the sector is to thrive. These constraints include; limited access to markets to poor integration (informal-formal linkages), access to finance constraints, poor infrastructural facilities, harassment from County authorities, poor security, lack of entrepreneurial and technical skills, lack of appropriate working areas and most of them have no insurance cover for their businesses. These are shared challenges between urban and rural firms that will need to be addressed to unlock the potential of the MSME sector.
Further, it has been observed that most start-up businesses (60%) never live to celebrate their first year of operation. This failure is attributed to lack of managerial skills of the business owners and lack of investment in training to ensure that, the right skill set is available to drive the business.
“To spur growth in the MSME sector through BDS support services, enterprise development skills, financial education, market linkages and access to appropriate financial services and market information intelligence”.Specific strategies
KDA will put emphasis on the following key strategies to support the growth and transformation of the MSME sector in Kenya.
- Identify high potential micro-entrepreneurs to be supported to scale their enterprises to small and finally medium enterprises
- Development of strategic partnerships for offering business development services (BDS) to the MSME players
- To offer enterprise development training and managerial skills to the MSME sector
- Enabling access to financial services through developed linkages and partnerships