New law holds promise to growth of small

Clients being attended to by salonist in town. Kenya Revenue Authority has embarked on a process that will see the SME being taxed.  Photo/FREDRICK ONYANGO

In Summary

• Unknown to many, Kenya’s micro, small and medium enterprises (MSME) industry employs about 80 per cent of the country’s work force, with the Kenya National Bureau of Statistics estimating that this segment creates over 92 per cent of job opportunities annually.
• Today, the number of youth entering the labour market is 16 times more than can be absorbed by the formal industry, making business the next best and sometimes better option for those seeking employment.
• When the law came into force in December last year, it opened doors to entrepreneurs all over the country, creating a blueprint that would regulate the growth and expansion of the sector at a time when more Kenyans are choosing to go into business rather than get absorbed in formal

By Dorcas Muthoni
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Unknown to many, Kenya’s micro, small and medium enterprises (MSME) industry employs about 80 per cent of the country’s work force, with the Kenya National Bureau of Statistics estimating that this segment creates over 92 per cent of job opportunities annually.

Considering the fact that the country’s unemployment rate currently stands at 40 per cent, and with over 70 per cent of those unemployed aged below 35 years, formalisation of this business segment could see it become the biggest solution to reducing joblessness, something that the MSE Act is well placed to drive.

Today, the number of youth entering the labour market is 16 times more than can be absorbed by the formal industry, making business the next best and sometimes better option for those seeking employment.

When the law came into force in December last year, it opened doors to entrepreneurs all over the country, creating a blueprint that would regulate the growth and expansion of the sector at a time when more Kenyans are choosing to go into business rather than get absorbed in formal employment.

AWARENESS CAMPAIGN

While we cannot fail to acknowledge that the industry has come a long way since its beginning in 1990s, the next phase of growth is yet to come, and it will be propelled by implementation of the MSE Act.

By improving regulation micro, small and medium entrepreneurs will be better placed to market their businesses, be they in manufacturing, agriculture, services or trading.

Already implementation of the Act has began and an awareness campaign on its provisions means that stakeholders in the industry will have to clean up their act, including restructuring their businesses and keeping records, so as to position themselves as candidates for financing from banks, microfinance institutions and the growing number of venture capitalists taking an interest in Kenyan businesses.

The formalisation of this business segment is critical to Kenya’s achievement of middle income status by 2030, and it is up to all stakeholders to work together towards implementation of the MSE Act 2012 to enable MSEs grow beyond the infamous jua kali enterprises.

The author is the CEO/founder of
Openworld Ltd.
Email: muthoni@openworld.co.ke