1. COUNTY BUSINESS ENVIRONMENT FOR MICRO AND SMALL ENTERPRISES IN KENYA
6TH ANNUAL DEVOLUTION CONFERENCE TRADE AND MANUFACTURING SECTOR 6TH MARCH 2019

2. Importance of MSEs in Kenya
MSEs play a vital role in job creation and income generation
Contribute 24.7% to the national output and 23.6% to the gross value addition
Employ about 81% of the total working population in the MSMEs (12.28 million persons)
Account for 95% of the manufacturing enterprises in Kenya
To achieve intended objectives in the industrialization process, paying attention to the business environment of the MSEs becomes a priority.

3. Challenges Facing MSEs
Access to worksites and common facilities
Worksite connectivity to utilities
Sanitation and waste management
WORKING ENVIRONMENT
Limited access to AGPO and other affirmative platforms
Unfair competition
Access to market
MARKET ENVIRONMENT
Access to affordable credit
Limited innovation and technology
Inadequate technical skills
FINANCIAL AND TECHNICAL CAPACITY

4. Initiatives to support MSEs
Kariobangi MSE Demonstration Centre upgraded to a Centre of Excellence to promote technological transfer, capacity building, products designs and development and marketing of MSE products
National Credit Guarantee Scheme to facilitate access to affordable credit.
Establishment of 52 Huduma Centres in 47 counties as “one-stop” service delivery points offering 70 government services
The Business Environment Delivery Unit established to improve the country’s business environment
Growth and Development of MSEs

5. County Business Environment for MSEs (CBEM) Framework

6. Ranking of CBEM indicators
Average score
Rank
Self-regulation
54.58 1
Licensing
44.12 2
Access to worksites
41.96 3
Electricity connection
37.76 4
Crime and public security
31.98 5
Roads
31.03 6
Access to markets
30.87 7
Water connection
25.94 8
Public toilets
20.76 9
Knowledge and skills mapping
19.87 10
Waste management
17.07 11
Training (capacity building) for MSEs
15.62 12
Corruption and governance issues
13.10 13
Common Manufacturing facilities
10.53 14
Unfair competition
7.86 15
AGPO
7.80 16
Industrialization culture
5.34 17
Access to digital finance
2.86 18
Innovations
0.50 19
Patenting
0.09 20
Overall average score
20.98

7. Worksites and related infrastructure
Limited land for construction of worksites
Appropriateness of worksite location
Adequacy of existing worksites
Access to worksites
Inadequate workshops in the facilities
Inadequate safety gears at the facilities
Distance to where facilities are available
Access to common facilities
Consistency in supply of electricity
Water shortage
Poor sanitation
Connectivity to utilities

8. Market environment for MSEs
Access to AGPO
Information gaps -awareness
Perception on getting tenders
MSEs Informality
Unfair Competition
Counterfeits and dumping
Misrepresentation –weights, prices, ingredients
Access to market
Poor road network
Levies and fees for local market
Certification of products for exports

9. Financial and technical capacity
Skills
No training needs assessment
Lack of skills standardization
Innovation
High cost of innovation
Unaware of intellectual property rights

10. Regulatory and governance framework
Self-regulation
Consistency in procedures
High admission costs of new members
Security and corruption
High cost of hiring private security
Fees/charges collection

11. Priority Policy Actions
Enhance coordination between institutions such as MSEA, KIE and county governments to facilitate development of adequately equipped worksites and common manufacturing facilities
Sensitize the MSEs to affirmative platforms including AGPO and Buy Kenya Build Kenya

12. Priority Policy Actions
Promote standardization and therefore quality of products for both local and international markets
Support innovation by working closely with KIRDI and KIPI and building skills for the MSEs
Digitize revenue collection at county and other services to smoothen the process.

13. Overall CBEM score

14. Worksite and related Infrastructure scores

15. Market Environment scores

16. Financial and Technical Capacity Scores

17. Governance and Regulatory Framework Scores