The micro and small enterprises (MSEs) commonly known as Jua Kali sectors in Kenya occupy a very strategic position in the country’s development. They have been identified as major contributors towards employment creation and wealth generation across all sectors of the economy. This sector is estimated to contribute overwhelmingly to the country’s Gross Domestic Product (GDP) by employing nearly 80 per cent of the population. The CEO of Micro and Small Medium Enterprises Authority, Mr. Patrick Mwangi shares with StartUp Magazine of the birth and the ambitious journey of the Authority to provide effective synergies for the growth of micro and small entrepreneurs.
Over the years, successive governments have therefore supported growth and development of the sector by implementing targeted interventions and programmes aimed at making it more vibrant. Nonetheless, the full potential of the sector has not been realized as there have been several organizations attending to the Micro and Small Enterprise (MSE) sector both in the public and private sector causing overlaps, duplication and confusion.
Although the private sectors have played critical tasks to nurture the sector with Kenya Private Sector Alliance (KEPSA) and Non Government Organizations among others adopting leading roles, the ultimate micro entrepreneur was sidelined. “Entrepreneurs did not get the resultant expectation. What existed was a disjointed approach towards appreciation of SMEs. They were critical issues, however, the sector continued agitating for its development,” shares Mr. Patrick Mwangi, the chief executive officer, Micro and Small Medium Enterprises Authority (MSEA).
It was then that a stakeholder’s consultation process which took several years to implement was undertaken. This subsequently led to the realization of sessional papers that were tabled in parliament with an overpowering reception and appreciation. They recommended for an institutional framework to create enabling policies that support MSE’s growth and development in Kenya; a recommendation that saw the birth of MSEA.
Birth of the Authority
The MSE Act 2012 was enacted with the objective and purpose to provide a legal and institutional framework for the development, regulation and promotion of micro and small enterprises; An Act that led to the formation of Micro and Small Enterprise Authority (MSEA) in January 2013. The Authority is coined in the Ministry of Industrialization and Enterprise Development with several mandates under its sleeves. MSEA has a collective responsibility to provide an enabling environment for the growth of MSEs and as well as facilitate access to business development services. “We are tasked to formulate and coordinate policies that will facilitate the integration and harmonization of various public and private sector initiatives for the growth of the sectors as key industries for our socio-economic prosperity,” shares Mr. Mwangi.
The harmonization of the sector was however received modestly among some players within the industry. The medium and large enterprises saw the implementation of the interventions as a major threat to their growth and sustainability. “This was a misconception because support of micro and small entrepreneurs is not only aimed to empower them, but for the collective prosperity of the country,” clarifies Mr. Mwangi. “We are focused on providing favorable framework to stimulate economic growth and job creation through expansion of the industrial sector, he adds.”
As such, these models that were even adopted and integrated in the national economic grid that is geared towards realization of a middle income economy in the next few years should not pose the alleged threats.
Micro and small enterprises
The MSE Act defines a micro enterprise as a firm, trade, service, industry or a business activity which employs less than ten people and with an annual turnover of less than Kshs 500,000.
On the other hand, small enterprise refers to a firm, trade, service or business activity which employs 10 to 50 individuals and with a turnover of between Kshs 500,000 to Kshs 5 million.
The Authority has several entities. First, is the Office of the registrar of Micro and Small Enterprise Associations; in liaison with MSEA, the Registrar is empowered to give identity and direction in creating formal structures to address informality in the sector. They range from cooperatives, youth and women groups. “Over time, they have played critical role in formalizing, regulating and guiding the sector. In so doing, the association groupings have enhanced the Registrar’s interventions in facilitating their growth highlights the CEO.
The association models are in four main sub-sectors which include the manufacturing, service, trade and agribusiness. These models have demonstrated proven social and economic benefits when working within the Associations in targeting the micro entrepreneurs through the social welfare and insurance funds.
Micro and Small Enterprise Fund is the second entity mandated to finance the promotion and development of micro and small enterprises by facilitating the access to affordable credit, capacity building, research and development, technology acquisition and transfers. The lack of access to affordable finances, skills and capacity to appreciate financial support has affected the growth of many micro enterprises. The fund will therefore be channeled to associations to facilitate their development by capturing and promoting innovation. “Micro entrepreneurs have unique and innovative products with access to the market being their biggest predicament offers Mr. Mwangi. However, capacity building and access to funds alongside technological transfers is helping them have a niche in the market place, he pinpoints.”
On the other hand, the Act birthed the formation of Micro and Small Enterprise Tribunal. It is tasked to arbitrate and settle disputes conveniently and at reasonable cost.
Instilling entrepreneurial culture
The Authority is concerned with the development of an entrepreneurial culture. “We need to instill the culture of entrepreneurship into the minds of the people from the very initial stages of their lives. More often, entrepreneurship has always been treated as a second option to many professions. Individuals only venture into it after failing to secure other means of employment or success,” shares Mr. Mwangi; A notion that needs to be wiped out.
The way forward
In order to improve product quality and enhance MSEs competitiveness, MSEA plans to develop and implement numerous approaches of capacity building which will incorporate collaboration with other institutions, including borrowing and/or adopting models that have worked elsewhere.
MSEA is also envisaged to spark industrial revolution in Kenya facilitating the development and value addition of on-farm produce and natural resources, mass establishment of manufacturers and service providers as well as promoting the specialization of cottage industries such as handcrafts and curios among others.