As the new administration settles down to work, it must create a friendly environment for small and medium enterprises (SMEs) to thrive.
SMEs have a huge potential to create jobs and provide livelihood for a larger part of our population.
As Kenya faces serious economic challenges, the William Ruto administration should leverage on SMEs to realise its development agenda and achievement of Vision 2030.
Remarkable progress has been made to reduce the administrative burdens on start-ups, including lower ing legal barriers to entry and reducing the costs for regulatory compliance in different areas. The Kenya Association of Manufacturers (KAM), for example, set up a manufacturing SME hub to uplift micro, small and medium businesses in value addition towards achieving the 15 percent targeted growth of the sector by 2025.
The hub's objective is to provide the necessary support through policy advocacy and capacity building to help small businesses move from point A to point B.
In 2019, KAM signed an MoU with African Gaurantee Fund for Small Medium-sized Enterprises to support SMEs financially.
SMEs, however, continue to face myriad of challenges that hamper their sustainability and growth. Most of these challenges require policy interventions. They need protection, institutionalisation and access to market opportunities.
The complexity of regulatory procedures, covering a wide range of areas such as licence and permit systems, insolvency, and tax, among others, remain a major obstacle to entrepreneurial activity.
An effective and transparent regulatory environment is key to entrepreneurship and SMEs development at all stages of the business life cycle, including entry, investment and expansion, transfer and exit.
Political goodwill is needed for small businesses to thrive because this would enable some of them to end up as big corporations.
The new administration should encourage State-owned banks as well as private banks to give soft loans to those who have already registered SMEs.