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Government assures Development Partners of support for MSMEs Sector

The Ministry of Cooperatives and Micro, Small and Medium Enterprises (MSMEs) has, in an interactive workshop, assured development partners of its unrelenting support for MSMEs by powering sustainable economic development through transformation of the sector.

Cooperatives and MSMEs Cabinet Secretary Mr, Simon Chelugui stated that the purpose of the workshop was to align with development partners on their priority programs and strategic focus in the Ministry towards implementation of the Bottom-Up Transformation Agenda (BETA) as well as seek support and collaboration in the implementation of some of these programs over the next medium term.

“You have indeed been a key pillar in our efforts to deliver on our mandate as a Ministry through your continued support to our various programs and we want to sustain that tempo of collaboration in the next medium term and therefore this meeting is important for us to explain and discuss with you the opportunities for collaboration within the BETA framework,” he said.

 

Chelugui made these remarks during a Development Partners’ Roundtable Meeting hosted by the Ministry that saw the participation of the Uwezo Fund.

 

The CS explained that cooperatives and MSMEs are a critical component of the Kenyan economy because they offer an extensive range of services across all sectors of the economy while MSMEs are key players in the production of goods and creation of employment that impact directly on the economy.

 

Both, he added, constitute 98 per cent of all business in Kenya, create 30 per cent of the jobs annually as well as contribute 3 per cent of the GDP growth.

 

At the same time, Principal Secretary State Department for MSMEs Ms. Susan Mang’eni said that the mandate of the department is to develop financing policy, support technology upgrade and modernization, promote and develop MSMEs to enhance their competitiveness and establish integrated infrastructural facilities.

Mang’eni said that the government is seeking the help of development partners in interventions such as the provision of the requisite infrastructure, training and capacity-building of MSMEs, support market access by MSMEs, enhancing financial access by MSMEs and reviewing the policy setting and regulatory framework.

“The Micro Enterprises had engaged 1-9 people and an annual turnover not exceeding Sh 500, 000, small enterprises has engaged 10-19 employees and an annual turnover between Sh 500,000 and Sh 5 million while medium enterprises have engaged 50-250 employees and an annual turnover between Sh 5 million and Sh 100 million,” Mang’eni said.

She added that 70 per cent of MSMEs fail within the first three years of operation because of the high cost of doing business, inaccessible and unaffordable credit, limited market access, and taxation gaps.

“We will formalize by undertaking a national survey on MSMEs, create a national database of MSMEs, enhance coordination and mainstreaming of the MSME sector, review the MSMEs Policy 2021 and register MSMEs,” explained Mang’eni.

Adding to the CS’s remarks, she reiterated that Bottom-up Economic Transformation Agenda (BETA) Priority Value Chains will prioritize leather and leather products: Dairy and dairy products; edible oils; textile and apparel; coffee and tea; rice, and construction and building materials which will create job opportunities, increase incomes; improve standards of living and create a National Database of MSMEs.

The PS disclosed that the current Financing Gap is about USD20 Billion and lending to MSMEs has been declining rapidly from 23.4 percent of banks’ loan portfolio in 2013 to 15.8 percent in 2018, with an increase to 20.9 percent in 2020.

Also speaking at the event, Uwezo Fund Chief Executive Officer (CEO) Mr Peter Lengapiani said that they support the MSMEs to be able to formalize themselves and participate in development funds like the hustler and youth funds.

“We have achieved a lot together and rely on each other’s backs to help groups since we saw an opportunity of us assisting them to form associations and cooperatives,” said Lengapiani.

The CEO revealed that together with the National Treasury CS, they had a discussion with the task forces they formed together and realized most of the groups collapsed in the first three years because of the setups they have that make it possible to liberate and work together as a team.

“We will help them understand how they can be able to form these associations and later to cooperatives where they will be able to market their products across the country with good prices,” he assured.

By Rebecca Maria and Michael Omondi

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