Kenyan State Enhances Support for MSMEs in Economic Recovery Strategy

Nairobi – In Nairobi, the Kenyan government is intensifying its efforts to support Micro, Small and Medium Enterprises (MSMEs) as a key strategy for economic recovery. Principal Secretary of the State Department for MSMEs Development, Susan Mang’eni, announced the government’s commitment to facilitating access to funds for MSMEs through various channels including Savings and Credit Co-operative Societies (SACCOs), venture capital, equity funds, and long-term debt. This initiative is aimed at assisting start-up and growth-oriented MSMEs.

According to Kenya News Agency, MSMEs are crucial for Kenya’s economy, constituting a significant portion of employment and being pivotal in various sectors including agriculture, housing, healthcare, digital infrastructure, and the creative industry. These sectors have been identified by President William Ruto’s administration as key to driving economic recovery and growth. Mang’eni highlighted the government’s efforts in enacting policies that aid MSMEs, including decriminalizing informal enterprises, making trading licenses more accessible, and ensuring trading locations for every citizen or MSME applicant.

The Principal Secretary also spoke about the government’s focus on supporting women and youth groups through table banking initiatives. She revealed that the Uwezo Fund has disbursed Sh 40 billion to 22 million Kenyans, with Bahati Sub-County receiving Sh 3.2 million to date. Other beneficiaries include Naivasha, Gilgil, Rongai, Subukia, Nakuru Town East, Nakuru Town West, and Kuresoi South.

Mang’eni emphasized the government’s plans to establish MSME business development centers in every ward and enhance the sector’s contribution to the economy through various interventions. These include creating a favorable business environment, providing access to affordable credit facilities, and facilitating market linkages.

The Financial Inclusion Fund (Hustlers Fund), established to address the mismatch between MSMEs’ needs and available financing products, was also mentioned as a key initiative. The administration aims to develop policies to encourage MSME growth and reduce their mortality rate.

The Kenya National Bureau of Statistics reports that Kenya has over 7 million MSMEs, employing around 15 million people and accounting for approximately 40 percent of the GDP. These enterprises are seen as a driving force for development across various sectors.

Bahati Member of Parliament, Irene Njoki, emphasized the role of the Uwezo Fund in enabling marginalized groups like women, youth, and persons with disabilities to access finances for business and enterprise development at the constituency level. The Uwezo Fund, established in 2014, offers interest-free loans with a six-month grace period and two-year repayment terms. It operates as a revolving fund at the constituency level.

The Central Bank of Kenya’s 2022 Survey Report on MSME Access to Bank Credit highlights that MSMEs are a significant source of funding for the banking sector. However, collateral requirements remain a major barrier for MSMEs in accessing formal credit.

The survey also notes the impact of non-performing loans on the sector and the vital role MSMEs play in achieving Sustainable Development Goals (SDGs), particularly regarding decent work and economic growth, and industry, innovation, and infrastructure.

Kenya’s focus on MSMEs is part of a broader strategy to navigate economic challenges, including the impacts of the COVID-19 pandemic, and to drive growth and prosperity through these enterprises.