Kenyan small and medium-sized enterprise (SME) sector is projected to contribute 50 percent of gross domestic product (GDP) growth in the next three years.
Speaking during the ‘Big Baraza Conference’, SNDBX Chief Executive Joram Mwinamo said that the sector which is rapidly growing is employing over 15 million people with 7 in every 10 people being employed by SMEs.
“Despite this, SMEs continue to face substantial challenges, key among them limited access to finance that impedes their growth,” he said, adding that the time is ripe to create a conducive space for SMEs to be productive and profitable at local and regional levels.
Echoing his sentiments, Micro, Small, Enterprise Authority (MSEA) Chairman James Mureu said more needs to be done to support the SMEs scale up.
“We need to stop doing lip service, and work towards strengthening the sector, government, and the corporate need to work with the SMEs to see them grow, by giving them opportunities,” he said.
The two-day conference is aimed at equipping SMEs with the necessary skills to weather the storm amid the global crisis. The conference has brought together SMEs, government, financial institutions and regulators in one room.
On his part, outgoing Safaricom Head of Business Enterprise Kris Senanu said SMEs operate with limited resources and hence are less able to absorb heightened costs that result from shocks like COVID-19.
“The COVID-19 pandemic, The Ukraine- Russia Wars, these are unprecedented external shocks affecting SMEs in Kenya, both in terms of supply and demand,” he added.
In Kenya, SMEs create 80 percent of employment, establish a new middle class and stimulate the demand for new goods and services. Most SMEs fall under the informal sector. The informal sector is estimated to constitute 98 percent of business in Kenya, contributing 30 percent of jobs and 3 percent of Kenya’s GDP.
“Small businesses are the backbone of our economy, and with the ripple effect of COVID-19, upcoming election, their protection has become more important than ever,” noted Grace Vihenda, Kenya Airways Innovation Lab lead.
During the conference, it was noted that lack of capital is still the largest constraint to SME growth in Kenya, preventing SMEs potential to be realised with their ability to create jobs, pay taxes and provide goods and services.
According to the World Bank, SMEs in Sub-Saharan Africa face a huge financing gap of US$330 billion.