Why County Governments should focus on MSME Sector.

Wealth creation can only succeed if there exists a focused approach to the Micro Small and Medium Enterprise (MSME) sector. In Kenya for example MSME sector has over the years been recognized for its role in provision of goods and services, enhancing competition, fostering innovation, generating employment and in effect, alleviation of poverty.

The crucial role of MSMEs is underscored in Kenya’s Vision 2030 - the development blueprint that seeks to transform Kenya into an industrialized middle-income country, through provision of   high quality life to all its citizens by the year 2030. It is therefore on this strength that the MSME sector has been identified and prioritized as a key growth driver for the achievement this key development agenda.

According to the Kenya National Bureau of Statistics (KNBS) 2016 basic report on Micro, Small and Medium establishments. The total number of persons engaged in this sector alone is approximately 15 million that is a huge number by all standards. Unlicensed enterprises contribute about 58 per cent  a clear indicator of focus area for the County governments in order to increase their revenue streams three fold or even more.

 This also shows that the general population has an appetite for doing some form of business in order to generate income to support themselves. Overall, micro sized enterprises account for over 80 per cent of employment in Kenya. Majority of these MSMEs are in the service sector, wholesale, retail trade, repair of motor vehicles and motor cycles that account for over 57 per cent  as  licensed and over  63 percent  unlicensed enterprises .

The same report found out that in the same sector business owners of licensed establishment were men at 48 per cent and 31 per cent females. Over 60 per cent of all unlicensed establishments, are owned by females,  proofing that females are more in the informal business enterprises unlike men hence existence of women chamas and mama mbogas, there is need for the County governments to put more emphasis to support and grow these unlicensed enterprises and transition them to formal status hence increasing the overall number of enterprises.

The MSME firms face a myriad of challenges ranging from lack of resources to assist in marketing their goods or services and this is where the County governments need to come out and offer technical support and  secure markets for  their products.

The major constraints in this sector emanate from regulatory environment characterized by multiple licenses for the same business. These licenses are also expensive and cumbersome to get making it difficult for people to register any business venture and fall among the unlicensed establishments.

To effectively streamline the business processes,  licenses should only serve regulatory function and not as a source of revenue for the County Government as is currently the practice, this approach kills wealth creation.

There is need to develop a comprehensive County MSME data by carrying out annual business census. This business information in terms of actual numbers, business changes, employment, gender and age of owners, sector and subsector, geographical locations within the counties. This critical data will guide in policy formulation and forms a key component in building capacity in our MSME sector.

The informal sector is estimated to have created 713,600 new jobs in 2015 accounting for 84.8 per cent of all new jobs (Economic survey 2016 report; KNBS). The County governments cannot afford to ignore this important statistics and instead drive this sector at the local level, in line with the Vision 2030 blue print. The mama mboga needs to grow her business in an environment where there is a win-win situation for both the business owner and the County Government, through wealth creation.

The Author,

Ekaale Ekuam

Freelance Writer, Entrepreneurship, and Innovation Management Consultant