When State's goodies for small firms aren't felt

Agencies and development partners do not leverage previous training done for business owners. [iStockphoto]

When Principal Secretary of State Department for Micro, Small and Medium Enterprise (MSME) Development Susan Mang’eni met with development partners at a Nairobi hotel, she was candid to share some of the reasons why the government’s efforts towards small businesses were not “being felt on the ground.”

And one of them is that everyone seems to be working in silos.

At the opening of the meeting, PS Mang’eni noted suggestions to, for example, collapse all state agencies into one. It is a suggestion donors have also raised, she said.

“A lot of questions have been asked on why can’t we collapse all these agencies together. Today we have an opportunity to make your (referring to state agencies represented) case because even development partners have been having those doubts,” she said.

She added: “You need to show them that you are different from each other.”

The meeting was attended by several development partners among them the World Bank, the United States Agency for International Development (USAID), United Nations Development Programme (UNDP), among others.

The state agencies present represented either chief executives or their nominees were the Uwezo Fund, Financial Inclusion Fund (Hustler Fund), Kenya Industrial Estates (KIE), Kenya Institute of Business Training (KIBT), Youth Fund, and Micro and Small Enterprise Authority (MSEA). 

It was particularly a challenge to know where the line crosses for the funds since their roles, as explained, appeared to be either intertwining or overlapping.

The PS had to use the analogy of a growing child detailing to the development partners that Uwezo Fund resembles a  baby in kindergarten. She christened it the last born of the three funds.

“The objective of the Uwezo Fund is to promote a culture of entrepreneurship. In our ecosystem, they are in the baby class. They deal with people who do not know there is an opportunity. They pool them together and give them financing for income generating,” the PS explained.

Uwezo Fund is then followed in the hierarchy by Financial Inclusion Fund which has come to be known to the rest of the country as Hustler Fund. Hustler Fund, the Grade One of the funds, explained by its chief executive Elizabeth Nkukuu, Hustler Fund exists to offer financial solutions to those at the bottom of the pyramid using technology.

“The reason why the fund is important is because access is important. If you look at the data, we have been able to reach everybody in this country,” she said.

Josiah Moriasi, chief executive of Youth Fund, which the PS likened to a Grade Four child, said the entity was established to address the issue of unemployment among the youth by promoting the culture of entrepreneurship.

MSMEs PS Susan Mang’eni (left) and MSEA chief executive Henry Rithaa during a meeting with development partners at a Nairobi hotel, July 14, 2023. [Elvis Ogina, Standard]

Job seekers

He said the fund seeks to make young people job creators and not job seekers.

“Those funds have had a high impact in terms of job creation,” he said adding that the fund has so far disbursed Sh15.8 billion to benefit 2.1 million youth. He noted that unlike Uwezo Fund which works in groups, what the Youth Fund has realised is that the youth do not like pooling.

This is especially the case for those who are college and university graduates.

“That is the segment we want to promote,” he told the development partners.

Already from the breakdown of the funds, Hustler Fund, which recently launched a group loan product, overlaps with Uwezo Fund which works in groups as well. Youth Fund does the same only that it seeks to create a niche because their data shows college and university graduates prefer going solo in their businesses.

“What we have learnt is young people prefer working not in groups especially those who graduate from college and university. They do not like joint or group programmes. They like establishing their own firms and pursuing their goals,” said Mr Moriasi.

MSEA, as explained by the chief executive Henry Rithaa is the body that ensures micro and small businesses are registered and formalised. This then ensures that they have the legitimacy to transact and do business. This is what the PS referred to as the big brother to all state agencies.

“That formalisation is not just at the individual level but also appreciating the micro sector, we formalise them through corporative, associations and groups; to soften the ground for higher level of formalisation in the entrepreneurship space,” he explained.

The PS noted that there are 18 million MSMEs in the country but only five million have some form of registration.

“Nobody knows where they are. We have no basic KYC (Know Your Customer) about them so that they can be assisted, supported and financed,” she said.

She said the government is working to ensure it brings all these businesses on its radar.

“We want at any given time when we wake up, we are able to determine how many businesses are at micro, small or medium,” she said,

The PS noted that as a government, there is a lot happening in this sector, yet little is seen on the ground

“The reason people are not feeling our efforts is because we are not pulling (our effort) together. The state department is creating a platform for that,” she said.

She pointed out capacity building as one of those fragmented areas where agencies and development partners do not leverage previous trainings done for business owners.

As such, when new funding or new partner comes to the fore, they go back and start training again for another set of businesses.

“If you are running another programme of financing, will we again begin from a level of training? What has been happening is we see people going back and begin the process, and a lot of SMEs get lost on the way,” she said. “You should build on what someone else has done because it is an ecosystem.”