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State’s ‘Building Back Better’ strategy good for women’s empowerment

By James Ombogo Onditi | July 21st 2021

According to the CBK annual bank supervision report, 204,802 of the 915,115 MSME loan accounts were classified as non-performing. [Courtesy]

According to the Ministry of Industrialisation, Trade and Enterprise Development, Micro Small and Medium Enterprises (MSMEs) employ more than 80 per cent of Kenya’s working population. According to Kenya National Bureaus of Statistics, MSMEs contribute about a third of Kenya’s Gross Domestic Product. The MSMEs, therefore, are a critical cog to Kenya’s economic development. This reiterates the need to support the enterprises.

Many businesses have experienced challenges related to decimated demand for and supply of goods and services during the Covid-19 period. The consequent restriction of economic activities across sectors has also led to loss of jobs.

The Covid-19 containment measures have had the unintended effect of shrinking earnings to the MSMEs. The restriction of in-person movement and curfew directives had the twin effect of curtailing the spread of the virus and depressing growth of MSMEs. Despite initial mitigation measures to help build resilience, many MSMEs could not weather the economic challenges, leading to massive job losses.

Therefore, initiatives and programmes that support MSMEs, especially at this time, are welcome. In the government’s 2021 Strategy for Resilient and Sustainable Economic Recovery, a raft of measures are proposed to ‘Building Back Better’.

Since the majority of the entrepreneurs in the informal sector are women, the outbreak of the pandemic saw many of them lose their livelihoods. [Courtesy]

The proposed prioritisation of pro-growth policy measures will ensure improvement in the overall economic growth of the country, which is likely to trickle down to the common mwananchi. In addition, implementation of a post-Covid economic recovery strategy and creation of a conducive business environment for employment creation, will speed up the process of rebuilding businesses affected by the pandemic.

To support the recovery and growth of MSMEs, the government intends to initiate a credit guarantee scheme, intensify capacity building, and digitally enable MSMEs to enhance their efficiency, productivity and competitiveness. With proper implementation mechanisms, the initiatives will no doubt benefit entrepreneurs in the MSMEs.

Building the capacity for the small enterprises to leverage technology for efficiency, productivity and competitiveness will most likely aid in their financial recovery and enable them to afford credit for expansion.

According to the Central Bank of Kenya annual bank supervision report, at the close of 2020, 204,802 of the 915,115 MSME loan accounts were classified as non-performing. Credit Officer Survey report of March 2021 indicated an increase in Non-Performing Loans (NPL) by sectors such as personal and household, tourism and trade, a clear indication of the reduced capacity of the enterprises to service their debt, thanks to the pandemic. Further, it was reported that there is a 50 per cent chance that the NPL would increase in the following quarter.

Building the capacity for the small enterprises to leverage technology for efficiency will most likely aid in their financial recovery. [Courtesy]

Since majority of the entrepreneurs in the largely unregulated informal sector are women, the outbreak of the pandemic and the resulting loss of jobs in the sector saw many of them lose their livelihoods. With their limited access to credit and lack of alternatives, many of the women entrepreneurs especially in rural areas and informal settlements are likely to find rebuilding their small and micro enterprises an uphill task, and this could roll back the gains in women’s economic empowerment.

‘The Building Back Better’ strategy, coupled with the budgetary allocation of Sh1.9 billion in Financial Year 2021/2022, is, therefore, a step in the right direction to economically empower small scale entrepreneurs, majority of whom are women.

However, it is important to put in place measures to ensure that women entrepreneurs have access to the share allocated to SMEs to ‘ease cash crunch’. Transparency and accountability in the utilisation of the funds will help entrepreneurs to rebuild better, more resilient businesses.

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