- SMEs have been noted to make up a large part of Kenya’s economy, accounting for approximately 98% of all businesses.
- The sector contributes up to 33.3 per cent of Gross Domestic Product (GDP).
Challenges of access to the market and affordable credit, infrastructure and logistics are a concern to Small and Medium-sized Enterprises (SMEs) in their product development mandate in the capital markets.
The Micro and Small Enterprises Authority (MSEA) has noted in a statement during the third National Capital Markets SME Forum.
The summit which was held in collaboration with the Capital Markets Authority (CMA), sought to discuss the challenges and opportunities for SMEs in the capital markets.
“The Micro Small Enterprises require capacity building in product development to improve quality and standards to appropriately enhance their play in the capital markets,” MSEA says in part.
SMEs have been noted to make up a large part of Kenya’s economy, accounting for approximately 98 per cent of all businesses.
They are spread across all sectors of the economy as they provide about 80 per cent of total employment.
The sector also contributes up to 33.3 per cent of the Gross Domestic Product (GDP).
Data from the Kenya National Bureau of Statistics (KNBS) shows that the SME sector contributes about 85 per cent of non-farm employment, which translates to 15 million out of the 18 million total workforces in the country.
However, during the forum, it was noted that a large proportion of SMEs in the country are informal with limited financial resources and face tremendous barriers in accessing conventional financial institutions for start-up businesses due to a lack of guarantee.
This financial challenge particularly affects entrepreneurs among rural women and other socially disadvantaged groups.
The chief executive officer at MSEA Henry Rithaa, thus noted the need to mainstream capital markets financing through capacity building, policy-aligned strategies and other incentives to deepen capital markets in the MSE’s sector.
“The SME Forum has brought together key players in the sector and capital markets sector to explore sustainable and innovative financing options that support the growth and development of the micro-enterprises sector,” Rithaa said.
CMA CEO Wyckliffe Shamiah noted that another key challenge SMEs are facing is the failure of a successful business to scale up their operations.
He, therefore, suggests the adoption of stakeholder engagement within and outside the capital markets fraternity.
This is a move he terms pivotal in converting the SME sector into a vibrant player, as the capital markets become the new focal point for catalysing the envisaged transformation.
Digitization of businesses was also echoed on the conviction that it is crucial to the adoption of e-commerce, which most of the SMEs are not able to adapt thus missing out on the available opportunities.