By O’brien Kimani.
Small and medium enterprises are now contributing 1.6 trillion shillings to the economy annually becoming a major driver of economic growth.
A new study by the Kenya National Bureau of Statistics shows that there are close to six million unlicensed businesses that rob the taxman billions of shillings in unpaid taxes.
The study also indicates that a small percentage of startups shy away from banks due to high cost of credit and low returns on savings.
In a country where unemployment is a historical conundrum, ingenuity and creativity becomes a critical asset for many job hunters. And this is the case for Kenya where un-employment stands at close to 30 percent of the youthful population estimated to be more than 50 percent of Kenya’s population of 46 million people.
The desperation for employment is opening up new job opportunities for millions of young people, though not translating into billions for the taxman.
A research done by the Kenya National Bureau of Statistics shows that more than 70 percent of the 7.3 million micro, small and medium enterprises are not registered with government entities.
However, they have become a key driver of employment and economic growth generating up to 1.6 trillion shillings to the total wealth generated in Kenya annually.
Wholesale, retail trade and the repair of motor vehicles and motorcycles are a soft job target for most KCPE and KCSE leavers.
The hospitality and manufacturing sectors contribute the second and third favorite areas for start-ups. However, due to lack of business management expertise, most MSMEs close shop within their first year of business leaving many entrepreneurs swimming in debts.
The report further says a majority of entrepreneurs hassle to raise capital from family and friends with most of them shying away from the formal credit system due to prohibitive cost of loans in Kenya.
The report calls on the national and the county governments to enact legislations that encourage the growth of the MSMEs.