Unlocking Kenya’s Economic Potential through MSME development

In Kiambu County, Nairobi, Dr. Teresia Njora witnessed the harsh realities faced by youth and women’s struggles, which often lead to social ills such as prostitution, drug abuse, and crime. Determined to make a difference, Dr. Njora embarked on an entrepreneurship journey meant to revolutionize the lives of these vulnerable people by establishing Baraka Mtindo Fashion Accessories.

Baraka Mtindo Fashion Accessories deals with fabricating fashion and other household products. The business journey started a few years ago when Dr. Njora realized that young women and youth were engaging in criminal activities due to a lack of guidance and a non-favorable economic landscape in the country. “I was heavily touched by the situation in Kiambu and decided to help our people. There was no time to waste. So, I sat down one day and came up with a concept that I thought would do miracles.”  says Dr. Teresia Njora. Together with a group of other like-minded individuals, they started a rehabilitation center first to help those coming from addiction to stabilize even as they train them in the fashion business. Thus, this initiative addresses the immediate needs of the youth and women and provides them with long-term solutions by empowering them into entrepreneurship.

However, like most other Micro, Small, and Medium Enterprises (MSMEs) in the country, Dr. Teresia Njora soon realized the difficulties of setting up a business and ensuring its scale.

“The first challenge was getting the equipment for the training and the business. We also had challenges with getting the right markets for our products. We soon started struggling and had to reach out for help. Luckily, we met Kenya SBDC at their Kiambu offices. They supported us through training, giving us advisory services and connecting us to several forums and events where we have been selling our products.” shares Dr. Njora. Part of the recent activities that Dr. Teresia’s initiative participated in courtesy of Kenya SBDC was this year’s International Women’s Day. Together with her team, they had an opportunity to sell and showcase their fashion products to thousands, including President Ruto, who graced the event. With Kenya SBDC’s assistance, Baraka Mtindo is quickly flourishing. The enterprise has expanded its reach and impact, allowing more women and youth to learn and thrive. Two additional shops have been opened in different towns, employing 12 people and training at least 15 women and youth monthly. Some trainees have already started their shops, while others have been employed in various businesses.

More women and youth are being saved from poverty, drug abuse, and addiction and enabled to sustain themselves. This success story underscores the need for more support and investment in initiatives like Baraka Mtindo Fashion Accessories to empower more MSMEs and transform more lives.

The case of Dr. Teresia Njora is just an example of what MSMEs are going through in their quest to establish businesses that enhance their livelihoods. This calls for an urgent and comprehensive review of the MSME environment and the implementation of supportive policies. The responsibility to create a conducive business environment for MSMEs lies with all of us.

Various governments and multilateral organizations recognize micro, small and medium enterprises (MSMEs) as critical economic growth and development pillars. In Kenya, they play a significant role in the socioeconomic development of the counties. According to the Kenya National Bureau of Statistics MSME survey of 2016, there are over 7.4 million MSMEs in Kenya, and they employ more than 14.9 million Kenyas across all sectors of the economy and account for close to 40% of the total country’s GDP. This underscores their potential to contribute significantly to the country’s economic growth and development, as highlighted by different strategies such as Kenya’s Vision 2030 and the Bottom-up Economic Transformation Agenda (BETA). For instance, targeted investments in the MSME economy is recognized as one of the ways of realizing the BETA objectives, such as creating jobs, eradicating poverty, and improving inclusive growth.

Despite their potential, MSMEs like Dr. Teresia Njora face several challenges, including difficulties accessing credit and finance facilities, inadequate advisory and training to empower them with business skills and knowledge to navigate complex legislation processes, regulations, and bureaucracies. These challenges often hinder their growth and sustainability. Besides this, the current economic landscape of high-interest loans and rising taxation has continued to threaten the sector, pushing more MSMEs into closure.

Thus, besides the need to review various MSME policy frameworks and to create a favourable environment for them to thrive, there has always been an urgent need for capacity-building MSMEs to enable them to easily take up different opportunities to increase their incomes and transform their livelihoods. However, this can only be achieved with the support and investment of key stakeholders, including governments, academic institutions, development partners, and other actors. Sustainable growth strategies must be implemented to enhance MSMEs’ resilience and avoid business-related shocks. This will ultimately empower them to be critical contributors to the economic development of different counties, as they should.

Deliberate strategies for enhancing the availability of information and awareness of business growth opportunities must also be implemented to open up the potential of MSMEs to various opportunities. Besides this, complexities in entry and access to business registration licenses and permits must be tackled. Mechanisms must also be implemented to improve the supply and access to finance from formal and informal institutions.

To make this possible, the USAID Strategic Partnership, a United States Agency for International Development (USAID) funded program being implemented by Strathmore University, established Kenya Small Business Development Centers (Kenya SBDCs) in six counties (Isiolo, Nakuru, Kisumu, Makueni, Kiambu and Mombasa). These SBDC centers provide free training and advisory services to MSMEs in the operational counties on various critical aspects, including navigating legislation processes, integrating technology in business development and promotion, export marketing, bookkeeping, and other business-related factors. Besides this, the program facilitates access to finance, loans, grants, and funding for MSMEs.

The Kenya SBDC model takes the best practices in business development and advisory services from the U.S. Small Business Development Center and transfers them to a local network of small business development centers in Kenya. The transformative impact of this model is evident in the success stories of MSMEs it has served. So far, Kenya SBDC has empowered more than 9,000 MSMEs, 60% being women and 40% of whom are men. Besides this, the project has helped MSMEs access more than Kes. 188, 615, 414, which has been used to scale up their businesses.

During the unveiling of a training initiative between Kenya SBDC and the Molo constituency, Mr. Elisha Bwatuti, the project manager of Kenya SBDC, elaborated on the numerous advantages of the model.  “Kenya SBDC is strategically empowering Micro, Small, and Medium Enterprises (MSMEs) in this country, including across the four wards of Molo, addressing the prevalent knowledge gap in business that hampers their expansion. Based on the results we are getting, this model has become a major stepping stone for the growth of this critical sector.”

Kenya SBDC is working hand-in-hand with all stakeholders, including the National and County governments, representatives from key ministries like the Ministry of Cooperatives, and MSME development, development partners, financial institutions, and affiliations like Kenya Bankers Association to ensure that MSMEs tap into available resources to expand their businesses. Part of these efforts are developing online resources and e-commerce training programs in partnership with organizations like the International Trade Centre (ITC), a joint agency of the World Trade Organization and the UN, to address the prevalent knowledge gaps in business.

To supplement the efforts of different organizations and programs like Kenya SBDC, there is an urgent need to review the Micro and Small Enterprises Act (MSEA) of 2012 in light of recent impactful developments, formulate more favourable policies to facilitate the integration and harmonization of various public and private sector initiatives and develop MSMEs as crucial industries of tomorrow.

Article by Morris Makabe