Set up fund for traders, Treasury told

Treasury Cabinet Secretary Henry Rotich (right) with PS Kamau Thugge (left). PHOTO | DIANA NGILA | NATION MEDIA GROUP 

In Summary

• KENASVIT argues that the delay in establishment of the MSE fund is a violation of the law and an impediment to the growth of the sector.
• The fund is aimed at financing the promotion and development of MSEs, provide affordable and accessible credit to them and financing research, development, innovation and transfer of technology.
• The informal sector and MSEs constituted 82.7 per cent of total employment in 2014.

By OTIATO GUGUYU
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Small scale traders want Treasury to set aside money for lending micro and small enterprises as stated in law.

Kenya National Alliance for Street Vendors and Informal Traders (KENASVIT) will Thursday hold a forum on a report by the Institute of Economic Affairs (IEA) over delays in implementing the Micro and Small Enterprise (MSE) Act 2012.

An examination of the budget estimates for this financial year confirms that for the third consecutive year, Parliament has not allocated funding for the MSE development fund as required by law.

“Many MSEs are unable to receive funding for business activities from other funds that have been established because there is broad knowledge that a dedicated fund is available under Section 51 of the law,” KENASVIT National Chairperson Kwache Anthony said in a press release.

MSE FUND

KENASVIT argues that the MSE funding delay is a violation of the law.

The fund allows small business associations already registered with the authority to access the funds which are disbursed in form of loans, credit access guarantees or invoice discounting.

The associations will then disburse the funds as loans, invoice discounting, guarantee for access to credit from other financial institutions, or given as a micro-finance product for the benefit of their members.

The fund is aimed at financing the promotion and development of MSEs, provide affordable and accessible credit to them and financing research, development, innovation and transfer of technology.

EMPLOYMENT

According the Economic Survey 2015, the informal sector is the largest job creator and most MSEs are in this category.

The informal sector and MSEs constituted 82.7 per cent of total employment in 2014.

“MSEs contribute 18 per cent of the gross domestic product (GDP) and provide 82 per cent of all jobs created annually. Small businesses are therefore central to economic growth and cannot be ignored,” Mr Kwache said.

The lobby wants to push parliament and the executive to ensure the fund is approved in the next financial year.

“KENASVIT is concerned that the fund has not been established because parliament did not authorize appropriation of funds to facilitate the formation of the MSE fund. For that reason, we believe both arms of government responsible for planning and authorizing for funds may be violating the provisions of the Act,” IEA boss Kwame Owino said.

According to the law passed in December 2012 the monies constituting the Fund would be placed in an account to be used for the promotion and development of micro and small enterprises.

The surplus would be invested by the Authority in treasury bills, treasury bonds or other securities issued by the Government and any income from the investments shall be credited to the Fund.

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