State in bid to allocate streets in towns, cities to informal traders
Exhibitors interact with customers during the 5th edition of the SMEs Conference and Expo on March 21, 2024 at the KICC courtyard in Nairobi.
What you need to know:
- Financiers urged to support MSMEs along the priority value chains.
- Women and youth-led enterprises more likely to have their applications rejected.
The government has initiated plans to allocate specific areas in towns and cities to informal traders.
The government will work with the devolved units to identify streets for the traders.
“A majority of our MSMEs [micro, small and medium-sized enterprises] are not able to afford formal shops and are forced to display their wares in open spaces. It is time for us to designate specific places where these MSMEs can work,” said MSMEs and Cooperatives Cabinet Secretary Simon Chelugui.
Mr Chelugui was speaking during the fifth edition of the Nation Media Group MSMEs Conference and Expo.
The CS said his ministry is also engaging county governments to consider making business licensing more favourable for MSMEs.
He added that his ministry is also working with savings and credit co-operative societies (Saccos)to extend more loans to the businesses.
Eco-friendly practices
The government recently launched a deposit guarantee fund supported by the World Bank from which Saccos can get money for onward lending to MSMEs.
Saccos have been urged to reach out to the Kenya Development Corporation if they wish to access the fund.
“Strengthening Saccos financing mechanism will facilitate provision of the requisite financial support to the MSMEs ecosystem. This will stimulate growth and competitiveness of the sector,” said Mr Chelugui.
The CS also urged other financiers to support MSMEs along the priority value chains for better outcomes.
Many traders are unable to access loans either because they are too expensive, require too much collateral or have application procedures that are too complex for them to follow.
Women and youth-led enterprises are more likely to have their applications rejected compared to those owned by older men, even though the former are in more need of financing.
Customers purchase clothes during the 5th edition of the SMEs Conference and Expo on March 21, 2024 at the KICC courtyard in Nairobi.
MSMEs have also been urged to tap into the available State-backed financial products including the Financial Inclusion Fund, Uwezo Fund and others set up specifically to address their financing needs.
This year’s MSME expo is themed “Advancing Sustainable Economic Growth for SMEs through Green Financing initiatives”.
It is pegged on the increasing need to empower MSMEs, as critical contributors to the nation’s economy through sustainable initiatives.
SMEs were urged to adopt eco-friendly practices, produce products and services that are socially responsible and reduce their carbon footprints so as to access new funds being put up by investors to address climate change.
“Our SMEs need to inculcate climate-smart investments into their business mechanisms and systems with clear follow-up strategies that serve the interests of mitigating climate change,” said Nation Media Group CEO Stephen Gitagama.
Mr Gitagama also called on the businesses to formalise their operations, so as to boost their credit worthiness.
Adopt new technologies
A large portion of MSMEs are unable to access finance because they have not formalised their operations, which means that they do not have any records that banks can use to assess their credit-worthiness.
“Increasing awareness about the potential benefits of compliance with laws on formalisation, including penalties for non-compliance through a sustained media communication strategy, will also enable the informal economy operators to view formalisation as a means to sustained growth and competitiveness,” Mr Gitagama said.
While in developed economies, the average rate at which MSMEs transition into corporate entities is five percent, in Kenya, the transition rate is one percent, according to Central Bank of Kenya data.
This year’s expo also sought to drive discussions around what needs to be done to help SMEs transition into larger organisations.
Adopting measures such as promotion of favourable ICT policies for instance, could enable MSMEs to embrace new technologies that they require to be able to innovate, streamline work and grow to the next level.
“While many SMEs are willing to adopt new technologies, they face challenges such as high cost of ICT infrastructure that stops them from shifting to digital operations,” said Micro and Small Enterprises Authority CEO Henry Rithaa.
