Jua Kali sector injects Sh3tr into Kenya’s economy, report reveals

The country’s small businesses, which include the Jua Kali sector, contribute about Sh3.4 trillion to Kenya’s total output.PHOTO: COURTESY

The country’s small businesses, which include the Jua Kali sector, contribute about Sh3.4 trillion to Kenya’s total output.

According to the Micro, Small and Medium Establishment (MSME) Survey Report 2016, these enterprises contributed 28 per cent of the national output of Sh9.9 trillion, and play a critical role in economic growth and poverty alleviation.

Moreover, 14.9 million Kenyans rely on this ubiquitous sector to earn a living, making it the largest employer in the country.

The survey, conducted by the Kenya National Bureau of Statistics (KNBS), is the first of its kind on the continent and is supposed to provide comprehensive data at national and county levels on the characteristics, operations, dynamics and evolving nature of MSMEs.

Devolution Cabinet Secretary Mwangi Kiunjuri said the Government took the role played by the MSME sector seriously, especially in the generation of income and alleviation of poverty.

SEVERAL CHALLENGES

He added the sector was key in the realisition of Vision 2030 goals, which seek to transform Kenya into a newly industrialising economy in 14 years.

Although the MSME sector is a huge employer and contributes significantly to the country’s gross domestic product, it is still beset by several challenges.

These include the fact that most enterprises survive just three years, while about 40.6 per cent of unlicensed businesses are set in the open and have no permanent structures. Another 44 per cent are in temporary or semi-permanent buildings, a fact that exposes them to such trivial inconveniences as rains.

A lack of skills is also an issue in this sector, with most business owners and employees lacking a college education.

The survey found that more than two-thirds of owners of unlicensed businesses did not have any education, and for the few who had, their highest attainment was a primary school certificate.

Indeed, there was neither an employee nor a business owner in the 5.9 million unlicensed MSMEs surveyed that held a degree.

Access to markets was also a challenge for these businesses, with individual consumers and other MSMEs being the main buyers of their products.

Despite the Government coming with a policy that 40 per cent of all Government contracts go to local firms, these businesses did not trade with the Government, exporters or large establishment.

In the last five years, including 2016, 2.2 million MSMEs were shut down as small entrepreneurs struggled with high operating costs, lack of access to credit and poor infrastructure.

The survey also found that 70.6 per cent of licensed and 85.8 per cent of unlicensed business had not applied for a loan in the last three years.