Ideas & Debate

Answer to Kenya’s economic growth lies in SMEs, not fancy strategic blueprints


Shaba Leather Products founder Wycliffe Wilundah displays one of his products during the ILO Youth Entrepreneurship conference at Safari Park hotel in Nairobi in May. Small business can spur growth with adequate government support. file

Achieng’s uncle was visiting when she asked: “Uncle, I’ve been a good girl, will you give me a thousand bob?” He looked at her fondly and said “I think you would be more successful if you asked for a hundred bob.”

Achieng’ answered, “Look uncle, give me a hundred bob or give me a thousand bob, but don’t tell me how to run my business.”

The Ministry of Industrialisation and Enterprise Development recently launched its strategic plan for transformation. I sat down in anticipation, ready to find a document that would be the roadmap to guide Kenya’s achievement of middle-income country status.

At 14 pages long, the document is short and crisp and spends a considerable amount of space defining the 10 industries that demonstrate great potential.

These have been identified as agro-processing, fisheries, textiles and apparel, leather, construction materials and services, oil, gas and mining services, information technology, tourism, wholesale and retail and finally small and medium enterprises.

Then the document skids into two pages that quite aptly describe the challenges facing those industries backed by quantitative economic data.

By this time my excitement was building up to a frenetic crescendo, the solution had to be around the corner by the time I got to page 13 of the document.

I turned the page and slid down my seat, slack jawed and drained. There was nothing. Unless you count a five-point strategy that uses language such as develop, create, launch and drive but does not put a single timeline or work plan around those pledges.

I kid you not, if someone opens up that document in the year 2050 they would quite easily place it in the public domain and pass it off as a fresh document, since there are absolutely no time commitments or demonstrable goal-driven action plans attaching.

Fine, there is ONE time bound goal: “To drive ease of doing business reforms and reach top 50 by 2020”. I’m still grappling with top 50 of which beauty parade we are trying to achieve and what the “ease of doing business reforms” actually consists of. Let me latch on to that one for now.

I’ll give you the true story of an amazing female entrepreneur who is blazing the trail in her chosen industry of furniture manufacturing.

Let’s call her Moraa for today, as she has been trying to meet with the Industrialisation secretary for the last five months with no success and I don’t want to ruin her chances for that hallowed meeting when it eventually happens.

Moraa started off her business about five years ago manufacturing quality furniture. She survived the first year, and the second, and the third and is now a proud employer of 28 Kenyans.

Feeling that she should expand her horizons and mitigate market concentration risk, she travelled to Uganda last year and found a retailer willing to purchase her quality products. That’s where the fun and games began.

“Carol, there is not a single place where one can get information about how to export ones’ goods in Kenya,” she told me. “But how did you figure it out?” was my surprised response.

Moraa’s treacherous self-taught journey to becoming an exporter was one that demonstrated tenacity, grit and a typical entrepreneurial strength of character that defines anyone doing business in Kenya.

Her first port of call was the Export Promotion Council. “Are you exporting tea? No? What about coffee? No? What about curios? No? Aii, we can’t help you!” Moraa stood there, gob smacked at the sheer lack of interest in assisting her with a basic checklist of what a Kenyan businessperson who wants to export non-tea, non-coffee and non-curio related products needs.

Using her networks she discovered that she needs an export duty exemption certificate so that her goods could freely pass through the Kenyan border point of Malaba for their initial entry into Uganda, a member of the East African Community.

After a few false starts she ended up standing in line at the Kenya Revenue Authority’s (KRA) imposing banking hall and paid the paltry sum of Sh300. “Carol, it’s 300 bob per container, can you believe it? And it doesn’t matter whether it’s a 20-foot or 40-foot container!”

Moraa’s disappointment with our government is that they are bending over backwards to make life easy for foreign investors to open up shop in Kenya, but not doing enough to ensure ease of doing business for the very SMEs that form the 10th engine of economic growth in the Industrialisation ministry’s strategic plan.

She showed me a screenshot from the Invest in Kenya web page and mused how a foreign investor who was willing to start up with Sh200 million could get a 10-year tax holiday in the Export Processing Zone scheme.

“I’m based here in Kenya, and KRA tells me that if I want to get a five-year tax holiday I must put in start-up capital of Sh250 million. How? I’m an SME!”

If you want to know where to fish, listen to the sound of the river. That is an old Irish proverb that is often used to educate business leaders on how to understand the markets in which they operate and get an emotional connection to their customers.

The hard working folks over at the Industrialisation ministry need to put on a pair of sneakers and walk the length and breadth of Nairobi’s Industrial Area, knocking on doors and looking into the battle weary eyes of business owners today.

They might discover that far from the new fangled ideas that have been cleverly written into the strategic plan, part of the answer to Kenya’s economic growth is in facilitation, education and ease of doing business in its purest form: opening new market frontiers and having a single point of information on how to do business for Moraa and her entrepreneurial kith.

The entrepreneurs will do the rest: run their businesses and grow our economy.

Email: [email protected] | Twitter: @carolmusyoka