Small enterprise development calls for much more than tokenism and sloganeering

The leading coalitions have both promised to promote small businesses. Azimio has pledged Sh300 billion in business finance. The competitor says Sh50 billion. The Azimio number is obviously higher. What is the competitor missing and why?

Stimulating the economy is about scale.

As I explained to my childhood friend and village-mate – Governor Josphat Nanok – in a TV interview a few months ago, small enterprise development requires serious commitment. Not tokenism and slogans.

Let us unpack the two promises. Sh50 billion translates to slightly over one billion per county, or about Sh173 million per constituency. Compare this to the Azimio pledge of over one billion per constituency.

Currently, the Laikipia economic stimulus programme supports micro and small businesses with up to Sh5 million at 7.5 per cent interest per annum. Total programme value is Sh3.3 billion. That translates to Sh1.1 billion for each of the three constituencies.

The Laikipia programme is a market-based model. Because the amount invested by the county goes towards buying down the risk, it can support a far larger portfolio. Laikipia has invested Sh165 million to support the Sh3.3 billion portfolio. Our colleagues’ Sh173 million can only support a similar size portfolio because they propose to use it in direct lending!

Mt Kenya vote

But what has all this got to do with the hunt for the Mt Kenya vote? Here is what. Last year, the region had an estimated 670,000 registered small businesses. The economies of the 10 counties in the region vary from Sh100 billion to Sh650 billion, but collectively we have a combined GDP of Sh2.7 trillion. For context, that economy is larger than 37 different African countries.

Forty per cent (265,000) of the licensed small businesses comprise small traders, shops or retail services, often with premises 50 square feet or less. The region has 27,200 manufacturing enterprises, which are categorised in their respective counties’ business licence registers as as small, medium and large-size workshops; and small, medium and large industrial plants.

Meru has 5,700 manufacturing enterprises, while Murang’a has 985. The respective figures are 8,100 in Nakuru, 589 in Laikipia and 6,040 in Kiambu. If you were to include processors of agricultural produce, the number would be much higher.

The 27,000 manufacturers should be producing what the 265,000 retailers are selling. And with an economy bigger in size than Rwanda, Botswana or Mauritius, Mt Kenya can support rapid expansion of manufacturing. But Sh173 million per constituency cannot hack it! And it is not just about money. Support must include finance, market access, technology and access to competitive inputs, particularly energy.

In Laikipia, we are supporting 1,700 with everything from business planning to market access and finance. We have an energy cost rebate for qualifying businesses and 79 locally made products enjoy preferential procurement by the county government. We want real scale-up solutions, not marketing slogans.

@NdirituMuriithi is the Governor of Laikipia County.