Cabinet Secretary for Industrialization and Enterprise Development Adan Mohamed speaks during a recent function. Photo/SALATON NJAU
What you need to know:
Industrialisation secretary Adan Mohamed said institutions for implementing the Micro and Small Enterprises (MSE) Act 2012 would be “up and running within 12 to 24 months.”
Small businesses will take longer to access soft loans for expansion from a newly created fund after the government said it would take two years to have enabling structures in place.
Industrialisation secretary Adan Mohamed said institutions for implementing the Micro and Small Enterprises (MSE) Act 2012 would be “up and running within 12 to 24 months.”
The law aims to register informal sector players and create a fund from where they can access soft loans for growth. Mr Mohamed launched the enforcement of the Act Thursday in Nairobi.
Registering businesses will enable them to compete for State jobs where 30 per cent of procurement of goods and services is now reserved for local enterprises.
Although the Micro and Small Enterprise Authority, which is tasked with coordination of the sector, is already running the registry of MSEs office is yet to be set up by the Attorney General.
The registry will be the regulator of MSEs responsible for licensing and suspension of errant traders. The MSE fund is also yet to be set up, delaying decisions on the size of soft loans and interest rates applicable.
Businesses will be clustered into 35 enterprises under one umbrella to access the funds. Informal sector entrepreneurs are banking on the law to secure permanent working sheds from county authorities to access loans from banks and reach markets. This will reduce frequent confrontations with county police with the formalisation forming an expanded tax base.
MSE Authority chairman Paul Ngugi said the sector employs over 80 per cent of the workforce but contributes only 18.4 per cent of GDP. In Malaysia MSEs contribute 32 per cent of GDP and 56 per cent of the workforce.
“This shows that Kenyan MSEs have not grown vertically, despite employing a large number,” Mr Ngugi observed.
There are about 1, 600 registered MSE associations, according to the Kenya National Alliance for Street Vendors and Informal Traders (KENASVIT). These are engaged in trade, manufacturing, service and agribusiness. They include small-scale farmers, jua kali artisans, boda boda operators, newspaper vendors, retailers and wholesalers.
The law defines micro-enterprises as businesses with an annual turnover not exceeding Sh500,000 and with less than 10 employees.
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