SMEs potential to create millions of jobs untapped – Chelugui

The enterprises currently constitute over 90% of traders, contribute 60% to employment and contribute 29% to the GDP of the EAC region

In Summary
  • MSMEs have been vulnerable to the economic shocks with the vulnerability reflected in the decline of economic growth on the continent.
  • The growth dropped by 0.8 percentage points from 4.5 per cent in 2021 to 3.7 per cent in 2022, according to the 2023 economic development in Africa report.
Ministry of Co-operatives & Micro, Small and Medium Enterprises( MSMEs) CS Simon Chelugui speaking during the 23rd edition of the EAC trade fair in Bujumbura, Burundi.
Ministry of Co-operatives & Micro, Small and Medium Enterprises( MSMEs) CS Simon Chelugui speaking during the 23rd edition of the EAC trade fair in Bujumbura, Burundi.

Micro, Small and Medium Enterprises in the East African Community have great untapped growth potential, with a projection of creating close to 470 million new jobs in the next six years.

According to Cooperatives and MSME Development Cabinet Secretary Simon Chelugui, the sector offers new openings in addressing the unemployment problem.

“These enterprises currently constitute over 90 per cent of traders, contribute 60 per cent to employment and contribute 29 per cent to the GDP of the EAC region,” Chelugui said.

He was speaking at this year’s 23rd edition of the EAC trade fair in Bujumbura, Burundi which brought together 1,000 enterprises from partner states, of which 300 were Kenyan.

The CS lauded the event saying it is through such platforms offer enterprises an opportunity to showcase their new products and innovations.

"Equally, they get the opportunity to share experiences on some of their life changing innovations and creativity that help them navigate economic headwinds,” he said.

He said the event presents an opportunity for Kenyan MSMEs to further understand the emerging market dynamics and business practices to facilitate business linkages for increased trade.

It was noted that EAC members trade more with countries outside the bloc than the partner states, making the region importers of products and services that ideally should be sourced within.

“This further dampens our production prospects, as it is evident investments in productive activities across Africa are insufficient,” Chelugui said.

Delegates at the expo called on partner states to consider integrating language, currency, transport, infrastructure and mobile networks to better link regional growth and sustainable development.

The push seeks to resonate with the East African Industrialisation Strategy that targets to increase intra-regional manufacturing of exports, relative to total manufactured imports in the region to at least 25 per cent by 2032.

Customs Union, which was established in 2005, was lauded on its impact, having generated the intended positive results over the last 18 years.

It was attributed for the upward trajectory in intra-EAC trade over the period, which stood at $10.17 billion (Sh1.6 trillion) as of September 2022.

Stressing the need for trade integration, the bloc boasts an expansion trajectory with the latest admission of Somalia.

The internal EAC market before the admission of Somalia had over 174 million consumers, a combined gross domestic product of $305 billion and total trade was $78.75 billion in 2022.

With Somalia’s admission, the region now stretches from the Indian Ocean to the Atlantic Ocean, making it competitive and easy to access the larger African Continental Free Trade Area (AfCFTA).

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