State unveils new law for small businesses

By WINSLEY  MASESE

The Micro and Small Enterprises Act 2012 will be launched today, in a move aimed at streamlining and creating order in the industry.

Once implemented, the Act will seek to strengthen the sector as a key engine of economic growth and address the high rate of unemployment among the youth.

Principal Secretary in the Ministry of Industrialisation and Enterprise Development Wilson Songa noted that the new Act would shift the mindset of the youth on entrepreneurship and the white-collar job market.

The implementation of the Act will also help in shifting the mindset of the youth from shunning the informal sector to settle for white-collar jobs, which might not be available.

Songa noted that job selection is mainly a result of value systems that equate work with formal employment and that do not lay emphasis on entrepreneurship and self-employment.

“We need a complete paradigm shift towards entrepreneurship and self-employment in order to address youth unemployment,” he explained in a statement.

The micro and small enterprises sector has lifted many countries from Third World status to newly industrialised countries and First World status.  “However, the micro and small enterprises sector in Kenya is often referred to as the informal sector and we must be fully aware of the consequences of the connotation,” he explained.  For one, employment in the informal sector is characterised by under-employment, low productivity and wages, absence of job security and social security provisions. “This calls for a change in the mindset of the MSE sector players as well.”

 It is estimated that over 750,000 people aged between15-64 enter the job market annually, with majority of the unemployed being the youths aged 18-35 years.

Youth unemployment also leads to increasing crime rates and indulgence in social vices such as prostitution and drugs abuse.

The Act provides for the establishment of two institutions and a fund.

The first body, Micro and Small Enterprises Authority, will be charged with the formulation of policies, and coordinate, harmonise and facilitate the integration of the various public and private sector activities and programmes relating to the sector. The other body, Micro and Small Enterprises Tribunal, will preside over disputes arising in the sector.

The Micro and Small Enterprises Fund will finance the development of players in the sector, guarantee and offer affordable and accessible credit. Besides this, it will finance research, development, innovation and transfer of technology in the sector.

Songa said that the new Act is also expected to address the competitiveness of the products of the sector and create over 800,000 decent jobs annually.

“The Act also seeks to create an enabling legal and regulatory environment to empower the MSEs to do business, including business with the public sector,” he said.