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To speed up industrialisation, State should increase support to MSMEs

OPINION
By Jesse Mugo | December 2nd 2021

A customer selects a piece of sugarcane from a hawker in Nyeri Town. [Kibata Kihu, Standard]

This year’s Africa industrialisation Week was marked at the governor’s compound in Nanyuki town last week.

This couldn’t have come at a better time than now when the county government has made huge strides in promoting local manufacturers and other medium, small and micro enterprises (MSMEs). No wonder the county got the privilege to host the industrialisation week!

The county has made a deliberate decision to support the MSMEs. Having been well-advised by the county’s 2021 statistical abstract that lists the MSMEs as the largest employment creators in the county at 77.6 per cent, Governor Ndiritu Muriithi’s administration has given the sector a keen eye.

Part of this focus has been the creation of a fully-fledged department of innovation, industrialisation and enterprise development with a dedicated chief officer.

Deliberate training and capacity building of over 200 staff who act as business development officers has also been a shot in the arm for the vibrant sector in the county. The county has also been offering market linkages and access to credit.

Supported by the Laikipia County Development Authority, the county has a Sh3 billion MSME stimulus fund that was created through partnership with local financial institutions to shield businesses from the effects of Covid-19.

This fund enables Laikipia businesses to access credit at subsidised rates of up to 6 per cent.

There is a huge number of unlicensed businesses in Kenya which the government can support to spur economic growth.

Formalising the informal sector through simplification of business start-up procedures and creating one-stop centres for business advisory services can go a long way in achieving this goal.

SMEs seeking to expand locally and globally must comply with both national and international standards. However, many Kenyan enterprises report obstacles to complying with standards.

These include lengthy and laborious processes to obtain certifications, product testing, compliance and other requirements. Lack of opportunities to do business with the government and failure to export goods and services exacerbate the situation.

Another way of achieving this milestone is fostering of SME innovation and patenting. Innovation is a key driving force for economic growth and competitiveness.

Only SMEs that are capable of harnessing technology and knowledge to develop high value-added products of superior quality will be able to compete globally.

County governments and the national government should do more to address product certification for new manufacturers, including possible waiver of all certification fees to spur innovation.

The offer of rebates, as in the case of Laikipia, will make locally manufactured goods more competitive. This, coupled with a deliberate protection from counterfeits, will create a thriving manufacturing sector in the country.

Our manufacturers also need to shift to machine-driven and technology assisted manufacturing. In my view, this might be the missing piece in the manufacturing sector.

The Ministry of Industrialisation, Trade and Enterprise Development’s preferential procurement Master roll of 2020 will also need to be actualised to make the enterprises realise anticipated gains.

Most manufacturing ventures are capital intensive with huge formative costs.

The provision of long-term development finance to the start-ups that have neither the collateral nor banking history to attract commercial bank credit interest will go a long way in motivating young and talented graduates to venture into the highly risky manufacturing sector.

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