Politics and policy

Small businesses get boost as Kibaki approves new law

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A lady displays some of her products during an exhibition at the KICC in Nairobi. Under the new law, businesses with an annual turnover of below Sh500,000 and employing less than 10 people will be registered as “micro enterprises”. Photo/Fredrick Onyango

A lady displays some of her products during an exhibition at the KICC in Nairobi. Under the new law, businesses with an annual turnover of below Sh500,000 and employing less than 10 people will be registered as “micro enterprises”. Photo/Fredrick Onyango 

By ALLAN ODHIAMBO

Posted  Tuesday, January 1  2013 at  18:53

In Summary

  • The Micro and Small Enterprises (MSE) Bill 2012 provides for the creation of a special agency to facilitate and develop small businesses with annual turnover of below Sh500,000.
  • Under the new law, firms with an annual turnover of below Sh500,000 and employing less than 10 people will be registered 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”.
  • A tribunal will also be set up to handle disputes involving micro enterprises and small businesses.

Small business enterprises are set for a lift after President Kibaki signed into law a Bill that guarantees them State support and protection.

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The Micro and Small Enterprises (MSE) Bill 2012 provides for the creation of a special agency to facilitate and develop small businesses with annual turnover of below Sh500,000.

Top government officials will sit on the MSE authority’s board, highlighting the importance that government attaches to the segment that accounts for 18 per cent of the country’s GDP.

The officials include principal secretaries in charge of ministries of industrialisation, trade, youth affairs and finance as well as seven persons appointed by the Cabinet secretary to represent key sector of the economy and various interest groups.

Under the new law, firms with an annual turnover of below Sh500,000 and employing less than 10 people will be registered 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”.

A tribunal will also be set up to handle disputes involving micro enterprises and small businesses.

In the manufacturing sector, the new 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.

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.

The changes are expected to boost the activities of the sector that has over the years been overlooked in favour of established outfits.

“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,” Tetu MP Francis Nyammo said when introducing debate on the Bill in Parliament.

The rush to seal the legal vacuum in the management of the country’s informal business comes hot on the heels of the March launch of the Sh3.8 billion MSE Fund by Treasury to provide cheaper loans to the segment.

aodhiambo@ke.nationmedia.com