Kenya Bankers Association
KBA Chief Executive Officer, Dr Habil Olaka.

ICT and Agriculture are the leading host sectors for a significant number of micro, small and medium-sized enterprises in Kenya, a new report shows.

The 2021 MSMEs Survey Report by the Kenya Bankers Association (KBA), also ranked manufacturing and construction as among the dominant hubs for the enterprises.

Collectively, these sectors account for an estimated 15 million job opportunities in Kenya’s economy.

The survey also indicated that over 90 per cent of the 279 MSMEs sampled in May, this year, from the Kenya Bankers Association Inuka Enterprise Program, were registered giving high hope of their formalization.

The report, conducted by KBA’s Centre for Research on Financial Markets and Policy in collaboration with the Japan International Cooperation Agency (JICA) revealed that over half of the businesses were fully incorporated, with 35 per cent of them being run as sole proprietorship.

The survey comes amid efforts to support MSMEs in light of the COVID-19 pandemic.

“At a time when economies worldwide and more so our domestic economy continue to be characterized by fragility and substantial slack due to the COVID-19 pandemic and its containment measures, any conversation on economic recovery in a sustainable way must be centered on strengthening the MSMEs sector, ” said KBA Chief Executive Officer, Dr Habil Olaka.

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“Cognizant of the fact that a strong and sustainable economic recovery in Kenya will be underpinned by a vibrant MSME sector, the need to characterize the environment MSMEs operate in would be important to facilitate appropriate interventions, including enhancing credit to MSMEs,” added Dr Olaka.

JICA Kenya Chief Programs Officer, Anne Olubendi, highlighted the need to support MSMEs. “MSMEs are more generally seen as accelerating the achievement of wider socio-economic objectives, including poverty alleviation. Their ability to grow highly depends on their potential to restructure and innovate. All these investments need capital and hence access to finance,” she said.

Access to MSME start-up capital remains limited. Only 22 per cent of the enterprises reviewed reporting having applied for start-up loans, out of which only nine per cent was from banks; own savings (64 per cent) and non-loan support from family and friends (12 per cent).

While 83 per cent of the MSMEs reported having had their loan applications approved within three months, 49 per cent said their borrowing from the different credit providers required collateral.

“In terms of employment patterns that define the size of the enterprise, most of the businesses surveyed are micro, with 85 and 87 per cent having less than ten full-time and part-time employees, respectively,” said KBA Research and Policy Director, Dr Samuel Tiriongo.

He added: “Only nine per cent of the enterprises are small (10-49 full-time employees), and 6.4 per cent are medium-sized (50-99 full-time employees).”

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