Thursday 18th, July, 2024

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My Take

Authority should invigorate small businesses

Gathu Kaara

The Micro and Small Enterprises Authority (MSEA) was established to develop and regulate small businesses in Kenya.

Majority of Kenyans might be forgiven for never having heard of it, despite the fact that it is supposed to be the institution assisting micro and small businesses, where the vast the majority of Kenyan entrepreneurs fall.

Since it started operations in 2013, MSEA has been lying possum while small businesses have been ravaged by huge challenges. The body has been dead as far as small businesses are concerned.

MSEA has, however, been given a new lease of life with the appointment of Henry Mwenda Rithaa as the new CEO. 

The importance of small businesses in Kenya cannot be gainsaid. This is the future of the economy, because this is where winning enterpreneurs are being nurtured.  This is the sector that contributes most jobs, given the inelasticity of jobs growth in the public sector and medium and large enterprises.

This is the authentic Kenya economy, because it is fully Kenyan owned and run.

Rithaa must hit the ground running. The Cabinet secretary for Trade Peter Munya must ensure that new leadership brings to MSEA new gravitas, energy, and momentum to start addressing the huge challenges facing micro and small businesses. It cannot be business as usual.

There are a number of issues that Rithaa must address immediately.

The first is the issue of pending bills owed to small businesses by the national and county governments. A payment of Sh100,000 might look small, but to a small business that supplied stationary, this is a matter of life and death.

The governments can prioritise small payments, say to be a maximum of Sh1 million, and sort out the bigger payments later. MSEA must lead the way.

The second is working spaces for the businesses. Why pray, after 50 years of independence, are businesses still working under trees, or sitting as squatters on private land?

The third is simplifying business licensing. There are too many licences and approvals from both national and county governments for small businesses and each has a cost. There must be a way of giving a few simple and comprehensive licenses to allow small businesses to start running, then monitor them as they grow. Licences should be incremental based on size of business. The government should  invest in systems that enable it to monitor business growth to determine who needs what incentives, breaks, and who needs to be brought under what licensing regime.

The same goes for taxation. In recent years, KRA, faced with huge tax collection targets, has swooped on small businesses. The businesses require support to grow to the level where they can be effective tax payers. Asking a small business whose turnover is less than Sh5 million a year, half of which is held up in pending bills, to pay huge taxes is being unreaslistic.

Fourth, MSEA must devolve to counties. MSEA’s only known office is in Nairobi. In line with this, MSEA must publicise their services. It must open avenues for feedback and complaints, as well as dispute resolution mechanisms.

Fifth, there was an SME fund that was launched years ago to give low interest and collateral free loans for small businesses. This fund has never taken off, nor the Sh3 billion seed capital allocated been accounted for. This Fund needs to be revived, run professionally, and adequately funded to fund small businesses.

In Kenya, there are millions of small businesses capable of moving to the next level, but are not doing so because they lack a source of funding that is not as restrictive as a bank loan.

And lastly, Munya needs to scrap the MSEA board and revamp it. The new board needs to be composed of champions of small business, people who have run businesses. A look at the last board shows clearly the paucity of businesspeople sitting on it.

It is expecting too much from people who have never run businesses to be  champions of entrepreneurship. They simply do not have the capacity to understand how business works.

Give the new boss an effective board to work with, otherwise his five-year tenure will end up just like that of his predecessor-simply red. 

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