Reigniting MSMEs can fire up Kenya to industrialised status

Recently, the Economist magazine summed it all. Africa has too many businesses without business, which has resulted to too many young restless workers without jobs.

These gaps should worry Africa’s policy makers. Formulation of collective regional policies will not do. They must be locally implementable. Thinking regionally but acting locally.

Recognising the centrality of Micro, Small, Medium Enterprises (MSMEs) as the major driver of this dream, the International Trade Center recently held a first-ever Global SME Ministerial Conference with call to action.

The objective of the conference was to bring countries together to develop solutions that will spur the MSME sector. Specifically, the call embodied a cost reduction strategy through actionable initiatives that would foster competitiveness in the sector.

First, to accelerate the digital transformation by enhancing accessibility to broadband, data centres and reduced cost of connectivity, boost digital literacy and capabilities with supportive regulatory framework.

Second, expand and diversify financial inclusion for the sector. Third, scale up the green transition by facilitating affordable green finance to the sector.

Kenya is a microcosm of the functionality and vitality of MSME sector in Africa, which has been lagging the rest of the world and calls for urgent attention.

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Historically, the country had tenaciously prioritised the MSME sector as evidenced by longstanding supply-driven policies that had resulted to low productivity and survivalist activities.

Nevertheless, the sector was entrenched in the national development blueprint, Vision 2030, as the carrier of Kenya’s dream of becoming an industrialised upper middle-income by 2030. This will not happen.

The endorsement of Africa Continental Free Trade Area (AfCFTA) by 54 out 55 African countries recast the SME at core of trade in Africa.

The implementation of AfCFTA has the impetus that could revitalise the sector, which in turn can rekindle Kenya’s aspirations of becoming an industrialised county.

First, having a developed digital ecosystem, the country can leverage technology to get an upper hand and speed up the digital transforming in MSME sector. Second, Kenya is leading producer and consumer of geothermal energy in Africa with enormous untapped solar and wind energy.

Consequently, it comparatively stands a better chance of scaling up green transition in support of the MSME sector. Third, as a reputable regional financial hub, Kenya has the wherewithal to expand tailor-made financial instruments for MSME as evidenced by the implementation of the Hustler Fund.

Evidently, Kenya stands on a firm moral ground to lead MSME revolution in Africa. As a county we must invoke our can-do attitude and dream again of becoming industrialised middle-income country as soon as possible.

We owe it to ourselves and to our restless and jobless youth. Policy makers must grab the opportunity by championing the implementation of AfCFTA with policy paradigm shift to demand-driven MSME policies. This we must do.

The writer is a public policy analyst at the Kenya Institute for Public Policy Research and Analysis (Kippra).