Strategies Kenya need to boost entrepreneurship

Over the last three decades, the level of governments interest in entrepreneurship and small business development as potential solutions to flagging economic growth and rising unemployment has increased greatly.

Entrepreneurial activity has been recognised as a major source of jobs and economic development.

Global researches indicate that small and medium enterprises (SMEs) account for more than 90 percent of all firms outside the agricultural sector.

Most people who start and grow businesses are opportunity motivated. Others are motivated by the necessity to earn their living when leaders of downsizing corporations replace them with technology and lay them off. Most of such businesses take the shape and form of SMEs.

The SMEs are found in a wide array of business activities, ranging from the single artisan producing agricultural implements, coffee shop, an Internet café in a small town to a small sophisticated engineering or software firm selling in overseas markets and medium-sized manufacturers selling inputs or products to local and international markets.

SME owners may or may not be poor and the firms embody different levels of skills, capital, sophistication and growth orientation, and maybe in the formal or the informal economy.

Small businesses constitute a major source of employment and may also generate significant domestic and export earnings. These positive economic indicators have made SME development a key instrument in poverty reduction efforts.

A small and micro-enterprise is, therefore, the result of successful entrepreneurial activity.

Research has shown that the success of entrepreneurial activities depends, to a large extent on the infrastructure or ecosystems available to a country.

In a paper presented to the Organisation for Economic Co-operation and Development (OECD) in 2004, the development of SMEs was found to require a cross-cutting strategy that touches upon many areas.

The areas mentioned in the paper included the ability of governments to implement sound macroeconomic policies and the capability of stakeholders to develop conducive microeconomic business environments.

This analogy still holds up to today. In simple terms, the OECD paper indicated that for SMEs to thrive, there is a need for simplified legal and regulatory frameworks, good governance, abundant and accessible finance, suitable infrastructure, supportive education, sufficiently healthy and flexibly skilled labour as well as capable public and private institutions, and the ability of SMEs to implement competitive operating practices and business strategies.

The OECD paper further stated that the SME development strategy must be integrated into the broader national development plans of poverty reduction to spur small business growth.

These discussions about SMEs as the engine of growth and poverty eradication are still ongoing globally. However, inasmuch as these talks focus on how governments can help SMEs to grow, they must champion the development of an enabling environment to continuously create and sprout new SMEs.

Therefore, culture and society, mindset and training are three very crucial entrepreneurial ecosystem elements to fast-track SME growth.

When growing up, at one time or the other, you must have been told repeatedly to read hard and go to university and later get a good job.

Others went a step further to tell some of us that if we scored very well we will earn a scholarship to study and work abroad.

Therefore, we all went into books, read and passed very well. True to word and form, some of us who were considered lucky all went into formal employment and took one more slot each. But what if the orientation and mindset were different? What if, from the onset, we had an education system that was designed to train students to be entrepreneurs from the start?

What if the system was such that one goes to school to be trained in ideas and skills of starting a business and becoming an employer, to creating jobs? I believe as many people now do, to change our attitude and approach to entrepreneurship, which creates SMEs, we have to overhaul our training curriculum to create awareness and purpose in students at an early stage, right from kindergarten to university.

Our institutions must realign the education curriculum to the needs of the 21st century, which is employment creation for sustainable development.

Entrepreneurship should not be looked at as a last resort to those who have been retrenched, laid off, sacked and such like stuff. It should be the first option and resort. There should be competition to start innovative businesses providing solutions to real societal challenges.

Students should be trained to create companies, start businesses and be prepared to fail without ever giving up.

The training should be focused on equipping future wealth creators with necessary skills, not becoming effective loyal employees.

Students should be trained to be entrepreneurs early in their academic life — train them in identifying opportunities, risk management and what to accept, reject or avoid while making business decisions. Train students to be business owners and thinkers who can identify a societal problem and come up with a solution. Train students in the culture of investment and saving, the starting point to becoming an entrepreneur.

There is real wealth in providing a solution to a problem. Think deep and avoid the ignominy of retiring to misery.

The government and trade associations should provide mentorship, advisory and other support systems to the budding young entrepreneurs.

Link students with industry gurus and those who have excelled in business.

Training models

Most importantly, provide industrial attachment to students so that they can learn the art of business while still in school.

Our training models are still heavily hinged on producing professionals to work in government and private institutions and only moonlight to do consultancies here and there to supplement the income.

Our engineers look forward to working for the big tech and firms. Accountants want to join the blue-chip companies or go abroad to be employed to sit behind a clean desk. But can you imagine just how many jobs could be created if all professionals with more than 10 years of experience were to gather the courage and start something in their line on a full-time basis? I am talking here about engineers, doctors, accountants, architects, surveyors, lawyers, marketers and public relations professionals, among others.

There would be an SME boom in this country if this were to happen. To make this happen and for an entrepreneurial spirit to take root, professional societies must also play their rightful role.

Professional societies are charged with registering members to carry on private practice. Their rules of entry may need a little tinkering to make them not become barriers, but enablers of entry.

They should relax some of the rules to make it a little easier and possible for new entrants to gain admission. This is a sensible way to create a sustainable formal SME.

Perhaps the biggest bottleneck to SME creation is our societal architecture of success. Those in entrepreneurship are looked at as people who have failed and are frustrated. Colleagues in formal employment are seen as more successful.

Perhaps society should also recognise the power of SMEs to create wealth and therefore start encouraging our sons and daughters who are out of employment to think of entrepreneurship.