Supporting SMEs is key to unlocking economic growth

Recent studies place small and medium enterprises at the heart of Kenya’s economic development.

Research shows that SMEs contribute significantly to economic development. The 2017 National Economic Survey report released by the Central Bank of Kenya reveals that small-scale traders account for about 98 per cent of all businesses in Kenya.

The report says that SMEs account for about 30 per cent of new jobs annually and three per cent of the country’s GDP. The vibrant rate at which the sector has been impacting economic development is no mean feat.

However, some unscrupulous traders have been taking advantage of this vibrancy to import substandard and fake goods at the expense of importers of genuine products.

Fake products do not only deny the government revenue, but they also pose serious health hazards to consumers.

Since May this year the government has embarked on a drive to stamp out trade in illicit goods through a crackdown steered by a multi-agency team drawn from various agencies. The Kenya Revenue Authority has been at the front-line of the fight against illicit imports. Apart from revenue collection, KRA’s mandate includes trade facilitation, border control, and enforcement of prohibitions.

As a result, KRA has put in place measures to ensure a level playing field for traders.

Early last year, KRA launched cargo tracking technology to deal with dumping of transit cargo in the country.

The Regional Electronic Cargo Tracking System (RECTS) is meant to deal with rampant dumping of goods destined for neighbouring countries into the local market.

Cargo dumping does not only deny the government revenue but also poses unfair competition to genuine local traders.

RECTS allows for real-time tracking of transit goods to the intended destination, hence discouraging dumping.

Since November 2015, KRA in conjunction with Kebs has implemented a programme which ensures that goods are inspected in the country of origin before shipment. The programme, Pre-export Verification of Conformity to Standards (PVoC), applies to all imports.

With a view to bringing on board small-scale traders who often import goods in consolidation, a framework has been developed to ensure that their cargo is inspected at the port of origin.

This programme substantially reduces the amount of time taken to clear goods once they arrive.

It is also meant to ensure that traders get high standard goods. Imagine going through the trouble of importing goods only to learn that they do not conform to local standards once they arrive! The pre-verification programme therefore serves as a guarantee to importers that once their goods are given a clean bill of health in the country of origin, non-conformity issues will be minimal.

Thanks to the programme, KRA has weeded out falsified documents previously issued by unscrupulous importers. The programme has also led to significant improvement in revenue collection.

Given required support in trade facilitation, small scale traders have potential to catapult the country’s economic and development agenda to higher levels.

Julius Musyoki, Commissioner for Customs and Border Control at Kenya Revenue Authority.