Creating a Framework for Small Business Growth in Kenya

11.22.2013

kenya-scales

Malach Onditi started Elemach Scales, a small business that manufactures weighing scales, in Nairobi, Kenya twelve years ago with a startup capital of $120 and one employee. Today the company has an annual turnover of $52,000 dollars, has twelve employees, and sells the scales not only in Kenya but also in Uganda and Tanzania. To exist this long in an environment where over 90 percent of business start-ups do not survive to the third year has not been an easy undertaking. Elemach Scales has experienced several challenges along this journey including inaccessibility of affordable credit, barriers to regional trade and access to markets, and harassment by county government officials in regards to licensing and workspace

Elemach Scales typifies a majority of small businesses in Kenya — a sector which currently provides 78 percent of the country’s total employment, more than 90 percent of new jobs, and 18 percent of GDP.  CIPE has worked with its partners over the last five years in efforts to build awareness for micro and small enterprise policy reform, facilitating extensive stakeholder input and building capacity for its advocacy which culminated in the signing into law of the MSE Act in December 2012.

Sponsored by Member of Parliament for Tetu constituency Hon F.T Nyammo, this breakthrough law is the first significant legislation targeting Kenya’s small business environment in several decades. The act establishes the legal framework for the promotion, development and regulation of the sector through the MSE Authority which will review policies and programs, promote innovation & research, and facilitate capacity development & market linkages. Set up Registrar of MSEs office which will register and regulate small business and associations. The act further envisions an MSE fund which will provide affordable credit and fund research and development, while a Tribunal (yet to be established) will arbitrate commercial and registration disputes between small businesses.

In a further effort to build momentum towards the implementation of the Act, CIPE’s partners in September 2013 facilitated the development and launch of a “popular” version of the act, officiated by the Cabinet Secretary in charge of Ministry of  Industrialization and Enterprise Development  and the MSE Authority  in Nairobi, which will be followed by county-based awareness campaigns which are set to kick off in January 2014 accompanied by the distribution of the popular version.

With the recent establishment of the MSE Authority, Malach the CEO of Elemech Scales says he can now see light at the end of the tunnel for an improved business environment. He is hoping among other things to grow his export market, especially as the authority works with interest groups and stakeholders to enable more MSEs to access the regional market. He also looks forward to improving his firm’s production capacity by accessing affordable credit that the MSE fund will provide to meet the growing market needs.

Ben Kiragu is CIPE Field Representative in Kenya.