The Cost of Bureaucracy

Micro and Small Medium Enterprises (MSMEs) is a sector that makes 34%-40% of Kenya’s GDP. This sector also absorbs 86% of people seeking jobs and hires between 93%-98% of the total workforce.

The Chief Administrative Secretary in the Ministry of Industrialization, Trade, and Enterprise Development David Osiany speaking at the SME’s Conference and Expo, held at KICC today, explained that the ministry developed a Micro/SME policy that was launched toward the end of 2021, and affirmed it by saying “We saw that there is no holistic policy that is tailored to handle the issues around MSME’s, from accessible and affordable financing providing work shade and providing access to markets.”

The CAS also highlighted that the key to grasping trade spaces like the EAC free trade area was for SMEs to become more competitive. He encouraged the sector to engage in diversification, to create more competition.

The growth of the SME sector has been a long journey on its own and has held its fair share of success, however, other than most key stakeholders speaking to the issues of access to markets and competition, there is one area we, for a very long time, have not fully dealt with, and that is bureaucracy.

In specific, the administrative part of starting a business in Kenya is the most gruesome for many Kenyans. The long processes and numerous offices one has to go to have a legal business, especially industries that take up the nature of production and manufacturing, processing and extracting raw materials, textiles, etc. could take even up to a year of fully settling into the legal books in terms of registration. Not to mention, industries like the textile industry that sometimes require international support to be able to have profitable distribution, make it difficult for the SME in this sector to break even.

Simpler, tighter processes need to start being a part of the MSME’s industry growth plan. For those already in, good for them, but I know the renewal of licenses is also a menace to some, especially if they are as many as those that fill up the office wall!

But more so, because we are looking to be more competitive, then let’s start getting those who are watching by the windows to get their foot in the door by making the processes or registration and licenses more realistic in terms of duration of approval, more in touch with financing, because it can sometimes be impatient, and more in touch with the number of innovative products waiting to be realized, and are only waiting for several approvals.

Let’s talk, shall we?     


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