By Nikki Summers
Kenya marks the first transition of power under a devolved system of governance, one of the major opportunities and challenges for the newly appointed governors will be to create an environment where Small & Medium Businesses can prosper and where job opportunities will be created for thousands of unemployed Kenyans.
One area that deserves special focus is the thriving informal business sector, which employs over 80% of the Kenyan working population. A sector that makes a significant contribution to the economy; nurturing and supporting these businesses so that they can develop into formal businesses. This could have positive spin-offs in terms of boosting tax revenues, ensuring sustainable of employment while encouraging wider regulatory compliance.
One way counties could support business builders is by providing them with habitable, safe and regulated spaces within the towns and cities; where the boda-boda operator, the fruit vendor and roadside mechanic can operate free from discrimination from law enforcement authorities and for coexistence with other functions in the same area. This will enable them to grow their businesses, having in place systems that will enable these businesses operate stop existing as stopgap activities that only run until they arrive at a supposedly permanent business.
Many informal businesses still operate outside the formal banking network and the tax net, settling sales and labour costs in cash, getting by without access to credit facilities. There is an opportunity for county development plans to outline a process of formalising these operations, putting in place incentives that will help them grow and thrive. The effect of which is a beneficial ecosystem where counties have a wider revenue net, increased job opportunities and better urban planning for effective resource allocation.
The goal of devolution being to ensure development and governance at the local level by availing services closer to Kenyans, developing capacity for existing businesses in order that they can absorb more people will help strengthen social and economic growth. A coordinated approach among counties where they exchange ideas and increase trade between them may help in minimizing replication of ideas and the proper utilization of resources.
The national government on the other hand will have a growing chance at better allocation of devolved funds, where areas with the highest growth potential receive more attention to impact the national economy.
As the new county leadership prepares for their induction, the issue on resource management need not be a stand-alone affair, but one that also looks at the dynamics of resource generation. How to harness the power and potential of micro-enterprises in order for all Kenyans to gain from the dividends of devolution.
At Sage, we believe that there are benefits in collaborations between small business forums, big business (including multinationals) and government to nurture the informal and small business sector. We would welcome the establishment of forums where emerging businesses can learn from established entrepreneurs as well as connect with big business and the government.
Entrepreneurship has the potential to power Kenya’s economy with entrepreneurs as the drivers of prosperity and it is in the government’s interest to support them. Business builders take risks to follow their dreams and pursue their passion. By affording small business owners a say in the way resources are utilized not only aligns to the devolution policy but by supporting them, they help to grow jobs and wealth to spur development.
The Writer is the Regional Director for Sage in East Africa