This archive report was first published on 26 June 2021.
On the United Nations' Micro, Small and Medium Enterprises (MSMEs) Day, we reflect on the crucial role these enterprises play in achieving the Sustainable Development Goals (SDGs), particularly SDG Eight on decent work and economic growth and SDG Nine on industry, innovation and infrastructure.
According to the International Council for Small Business, globally, formal and informal MSMEs make up over 90% of all firms, accounting for 70% of total employment and 50% of gross domestic product.
In Kenya, MSMEs are the engines of growth, contributing about 80% of employment and playing a key role in reducing poverty, stimulating entrepreneurship, and promoting innovation for achieving the SDGs.
However, over the last two years, MSMEs have faced uncertainty due to the adverse effects of Covid-19, with many businesses experiencing closures, cash flow erosion, and disruption of supply chains.
The SME Competitiveness Outlook 2020 by International Trade Centre reveals that in Africa, two out of three businesses were strongly affected by Covid-19, with 75% experiencing reduced sales and 54% struggling to access inputs.
Despite these challenges, MSMEs have adopted mechanisms to combat the pandemic, including cost-cutting measures, diversifying their business models, and adopting timely innovations in response to changing market dynamics.
As the world shifts towards digitisation, MSMEs can play a crucial role in improving their resilience and contributing to economic resurgence.
The State has implemented stimulus policies and programmes to support MSME resilience, including tax breaks, seed funds through a credit guarantee scheme, payment of pending bills, and debt moratorium programmes.
Additionally, the financial sector has played a crucial role in stabilising the operations of MSMEs, with NCBA supporting the disbursement of over Sh432 billion in digital loans to small enterprises and individuals.
As we commemorate MSMEs Day, it is essential to acknowledge the urgent need for a coherent policy response to build a resilient sector and help small businesses ride out crises, reduce their risk of bankruptcy, and cushion the economy.
