Small and medium enterprises (SMEs) in Kenya contribute 1.6 trillion shillings (about 15.8 billion US dollars) to the economy annually and have become a major driver of economic growth, according to a new study by the Kenya National Bureau of Statistics.
The study shows that there are close to six million unlicensed businesses which rob the taxman of billions of shillings in unpaid taxes. It also indicates that start-ups shy away from banks because of the high cost of credit and low returns on savings.
In a country where unemployment is a historical conundrum, ingenuity and creativity becomes a critical asset for many job hunters. And this is the case for Kenya where unemployment stands at close to 30 per cent of the younger population, who are estimated to represent more than 50 per cent of Kenya’s population of 46 million people.
The desperation for jobs is opening up new job opportunities for millions of young people, although it does not translate into billions for the inland revenue service.
Research by the Kenya National Bureau of Statistics shows that more than 70 per cent of the 7.3 million small, micro and medium enterprises (SMMEs) are not registered with government entities although they have become a key driver of employment and economic growth, generating up to 1.6 trillion shillings to the total wealth generated in Kenya annually.
The wholesale and retail trade and the repair of motor vehicles and motorcycles are a soft job target for most school-leavers while the hospitality and manufacturing sectors contribute the second and third favorite areas for start-ups.
However, a lack of business management expertise cause most MSMEs to fold up within their first year of business, leaving many entrepreneurs swimming in debt.
The report says a majority of entrepreneurs face problems raising capital and they generall approach family and friends with most of them shying away from the formal credit system because of the prohibitive cost of loans in Kenya.
The report calls on the national and the county governments to enact legislation which will encourage the growth of SMMEs.
Source: NAM NEWS NETWORK.