Politics and policy

MPs approve law to promote growth of small business

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By EDWIN MUTAI

Posted  Thursday, November 29   2012 at  20:57

In Summary

  • MPs approved the Micro and Small Enterprises Bill 2011 which seeks to support firms with annual turnover of below Sh500,000.
  • The Bill will require the registration of firms with an annual turnover of below Sh500,000 and employing less than 10 people as “micro enterprises” and those with an annual turnover of between Sh500,000 and Sh5 million and employing between 10 and 15 people as “small businesses”.
  • The establishment of the SME Authority will provide for the organisation of the microenterprises while helping them access credit and markets.

Parliament has passed a Bill that could see an authority set up to facilitate and develop the small business.

MPs approved the Micro and Small Enterprises Bill 2011 which seeks to support firms with annual turnover of below Sh500,000.

Through a motion sponsored by Tetu MP Francis Nyammo, the legislators called for speedy enactment of the law to provide a legal framework for the promotion, development and regulation of MSEs.

The Bill will require the registration of firms with an annual turnover of below Sh500,000 and employing less than 10 people as “micro enterprises” and those with an annual turnover of between Sh500,000 and Sh5 million and employing between 10 and 15 people as “small businesses”.

The proposed law which went through the second reading on Wednesday creates a tribunal that will handle disputes involving micro enterprises and small businesses.

“There has been no legal system specifically tailored to regulate these enterprises, despite the fact that they play a significant role in the economic development of Kenya and are a source of employment for a significant proportion of the population of Kenya,” said Mr Nyammo while introducing debate on the Bill. In the manufacturing sector, the proposed law confines “micro enterprises” to investment in plant and machinery or the registered capital that does not exceed Sh10 million or Sh5 million for service and farming ventures.

“Small enterprises” in the manufacturing sector will be limited to investment in plant and machinery as well as the registered capital of the enterprise that is between Sh10 million and Sh50 million.

The registrar of Micro and Small Enterprises will have a six-day timeframe to consider requests for registration of enterprises and issue successful applicants with registration certificates to operate.

Mr Nyamo said the establishment of the SME Authority will provide for the organisation of the microenterprises while helping them access credit and markets.

“Statistics from government show that in 2012, MSEs were able to create up to 80 per cent of jobs in the country. They also contributed between 18 to 20 per cent of the GDP,” he said.

The Tetu MP said according to official statistics 503,000 jobs were created in 2011 out of which 430,000 were in the MSE sector.

Emuhaya MP Dr Wilbur Ottichillo supported the Bill saying it would spur economic development in the country.

“The Bill is important for development of Kenya. Most economic activities are centred on micro and small enterprises,” he said.

MPs Muturi Mwangi, Jeremiah Kioni, Isaac Muoki and Jakoyo Midiwo regretted that the sector had operated over the years without proper legislative framework.

“The Jua Kali sector in Kenya has played a major role in development but there is no law to govern it. We need to ensure that there are proper laws to protect the entrepreneurs in the sector especially on issues dealing with land tenure and ownership in town and rural markets,” said Mr Mwangi.