This archive report was first published on 29 June 2021.
Kenya's economy is heavily reliant on Micro, Small and Medium-sized Enterprises (MSMEs), which collectively create an estimated 15 million employment opportunities. According to the 2021 MSMEs Survey Report, ICT and agriculture are the leading host sectors for these enterprises, followed closely by manufacturing and construction.
The report, conducted by the KBA Centre for Research on Financial Markets and Policy in collaboration with the Japan International Cooperation Agency (JICA) in May 2021, analyzed 279 MSMEs and found that over 90 percent were registered, indicating a high level of formalization.
Interestingly, while 80 percent of the enterprises operate a bank account in their business name, the remaining 20 percent use personal accounts, highlighting a narrow distinction between borrowing for business and personal needs.
Furthermore, the survey revealed that 54 percent of the enterprises seek personal loans, while 46 percent obtain credit for business support. This is a crucial finding, especially in light of the COVID-19 pandemic, which has had a significant impact on the economy.
Speaking on the importance of MSMEs in Kenya's economic recovery, KBA Chief Executive Officer Dr. Habil Olaka emphasized that a strong and sustainable economic recovery will be underpinned by a vibrant MSMEs sector. He added that the need to characterize the environment MSMEs operate in would be important to facilitate appropriate interventions, including enhancing credit to MSMEs.
JICA Kenya Chief Programs Officer, Anne Olubendi, also highlighted the need to support MSMEs, stating that they are more generally seen as accelerating the achievement of wider socio-economic objectives, including poverty alleviation. She emphasized that their ability to grow highly depends on their potential to restructure and innovate, which requires access to finance.
