Poor skills, financing sink MSMEs

Businessman investment consultant analyzing company financial report balance sheet statement working with digital graphs.[Getty Images]

The government has warned that a lack of basic information, market linkages and credit management has contributed to the slow demise of micro, small and medium enterprises (MSMEs).

The State Department for MSMEs notes that despite MSMEs contributing about 40 per cent of the Gross Domestic Product (GDP) and employing over seven million people, a lack of knowledge and finance is leading to high attrition.

The department is calling for inclusive management of MSMEs in a bid to curb enterprise failure and spur economic growth.

Senior Assistant Director for Agribusiness and Manufacturing Tabitha Gicheru said the sustainability of enterprises depends on continuous training of business owners, especially youths who are heavily involved in the sector.

“The high attrition rate is due to a lack of an elaborate administrative and financial management culture among proprietors,” said Ms Gicheru.

Ms Gicheru observed that MSMEs form the bedrock of business in Kenya and that players in the sector need to equip proprietors with information to build a productive, competitive and diversified sector.

She further noted that the MSMEs (Amendment) Act, 2025, would strengthen institutional and regulatory frameworks, streamline compliance, and enhance access to finance, competitive markets and technology.

“The sensitisation on the policy has been conducted in Kisumu and Uasin Gishu counties with a view to enlightening enterprise proprietors on best leadership practices,” she said.

She added that the training would enlighten proprietors on financial probity and quality control of goods and services for better positioning in local and global markets.

Nduta Ndirangu, the project manager at IYBA SEED, observed that while the sector has the potential to provide job opportunities to at least 20 million people annually, it lacks inclusive leadership.

“The inclusion is critical to ensure there is a desired transition from micro to small and medium enterprises,” she said.

Ms Ndirangu noted that a strengthened MSME ecosystem promises gainful employment opportunities for the country’s marginalised populations, including persons with disabilities, youth and women.

She insisted that investing in young people would enhance the effectiveness and sustainability of entrepreneurship ecosystems.

“The new Act provides a roadmap to the much-needed technical assistance and resources to enhance public-private partnerships for profitability,” said Ms Ndirangu.

Margaret Njeri, a small-scale baker in Nakuru, said government support would enable business owners to run their enterprises with their minds open to numerous affordable financing options.

“The policy aims to provide multiple pathways to affordable and sustainable funding, which would discourage the closure of shops due to financial constraints,” she said.