Trade chamber ripe for State’s financial help

As a membership based organisation, the Kenya National Chamber of Commerce and Industry primarily depends on annual dues from its members to finance its day to day operations and carry out its mandate.

However, in light of the escalating and evolving needs of the private sector and SMEs in Kenya, the Chamber’s scope of activities has in recent years rapidly expanded, introducing the need for additional sources of finance.

Today, the Chamber no longer restricts itself to highlighting the key issues facing businesses; nor is it solely focused on providing networking opportunities for businesses.

We have broadened our vision and are engaged in economic diplomacy; trade relations in key global markets; policy research and advocacy; training of SMEs on business best practice; and enterprise development at the county level.

Although these expanded functions have a demonstrable positive impact on Kenya’s economic growth, they come at an added cost that cannot be exclusively covered by membership dues. To sustain these critical functions, the government needs to step in and support the Chamber through funding, legislation or a mix of both.

The government should not view this call for stronger support for the Chamber as an added strain on its coffers, but as an opportunity for the country to benefit.

Kenya stands to gain immensely, as illustrated by the experience in other countries where governments directly support their chambers of commerce through legislation or funding.

In a number of EU member countries, governments have made membership to the Chamber of Commerce compulsory for businesses of certain sizes, types, or sectors. For instance, German SMEs, known as the mittelstand in Germany, comprise a key constituency in their Chamber of Commerce membership base.

This explains why Germany is ranked fourth in the global economy, despite hosting only 28 companies in the Fortune 500. Germany’s engine of growth are the SMEs. This is thanks in no small part to the organisational support of its Chamber of Commerce, and the fact that its government has made membership compulsory.

Comparable government interventions to make Chamber membership compulsory in Kenya will allow the Chamber to net more members, particularly among the SMEs in the counties.

This will accelerate the pace of formalization of the economy by encouraging compliance among businesses at the grassroots. Kenya’s formal sector is still too small, representing around 20 per cent of the economy.

A larger formal sector means that the government will not only expand the tax base, but also lower individual taxes for businesses due to equitable sharing of the tax burden.