Businesses getting funding should demonstrate ability to grow and aid job creation. FILE PHOTO | NMG
In response to the
proposed parastatal reforms, the Presidential Task Force five years ago
submitted its report to President Uhuru Kenyatta. And in line with the
stated objective of improving
management and governance of State corporations, the taskforce recommended the scrapping or merger of some parastatals.
management and governance of State corporations, the taskforce recommended the scrapping or merger of some parastatals.
The report, for instance, boldly
recommended amalgamation of the Youth Enterprise Development Fund, Uwezo
Fund, Women Enterprise Development Fund, and Micro and Small Enterprise
Authority into one corporation.
The majority of those
who read the report gave it a thumps-up, arguing that the
recommendations offered the best chance ever of aligning the State
corporations to the 2010 Constitution’s aspiration that they should
contribute to the achievement of national development goals without
over-dependence on the Exchequer.
But despite Mr Kenyatta’s directive that the reforms be implemented, limited progress has been witnessed so far.
It
was, for instance, not until May 2018 that the regulations meant to
guide the operationalisation of the Biashara Kenya Fund were approved.
Nonetheless,
in a recent interview, the Public Service cabinet Secretary Margaret
Kobia gave arguably the clearest signal yet on the path to execution,
noting that the Biashara Kenya Fund would be implemented within six
months.
The timeline may be ambitious, but a step in
the right direction and Kenyans can only hope that the ministry will
remain committed to the stated timelines.
Over the
years, taxpayers have urged the government to implement these
recommendations to avoid duplication and overlaps in State agencies,
without much success.
But on a more positive note, the government’s focus on creating
an enabling environment for the youth, women and disabled people to do
business through provision of credit and capacity building programmes is
laudable.
It is an open secret that access to credit
has been difficult since the introduction of interest rates cap on bank
loans in 2016.
The affirmative action fund has been the
holy grail of enterprise, especially among the aforementioned
vulnerable group, enabling them to access credit for business
development.
Quite a sizeable number of beneficiaries
of these funds have gone ahead to establish business entities and joined
the much needed pool of micro, small, medium enterprises (MSMEs).
However,
statistics paint a grim picture as most MSMES don’t live to celebrate
their third birthdays. There exists a high failure rate among emerging
MSMEs with most having a very low survival rate within the first three
years of operation.
This is not sustainable, especially for entrepreneurs who borrow to establish business entities.
With
the establishment of the Biashara Kenya Fund, we have a perfect
opportunity to invest in business development support for the start-ups.
This would ensure sustainability of the entities.
And
with the amalgamation of these funds, the government is able to pool
resources to adequately provide business development support.
With
the Treasury having allocated Sh2 billion annually to Biashara Kenya
loaning at concessionary rate of six per cent, the main objective of
this fund should not only be to offer financial credit but to also
ensure investment in sustainable businesses countrywide.
This
offers a solid business case to invest highly in long-term business
development support to ensure that the businesses access funding only
when they commit to receiving these services.
To upscale the training countrywide, we can leverage on Huduma Centres to provide a hub for the business development services.
Serious
investment in continuous business development support is key to the
government achieving its capacity building objective.
The
aim of the fund should be to invest in businesses that will still be in
existence after three years, looking to scale and providing employment
opportunities. Achieving this requires the informal businesses to mature
into formal and professionally managed enterprises.
The
establishment of this fund is a huge policy achievement and could be a
platform to reach milestones in curbing the twin challenge of youth
unemployment and poverty.
Additionally, it could
facilitate a platform to develop a database, conduct research and
publish public reports on long-term MSMEs performance.
Considering
the country’s huge public debt burden, investment in business
development support could ensure sustainable MSMEs and raise their
contribution to the Gross Domestic Product which is a sure win for the
youth and the country.
Ajowiis a co-founder at Six Degrees Consultancy. ajowijuma@gmail.com
No comments:
Post a Comment