Big wins for SMEs

Banking on technological advances in standards application, KEBS has also committed to supporting MSMEs to adopt ICT and adapt to the digital revolution by exploiting tech opportunities such as cloud computing and data analytics, among others.
  • 11 Sep 2020
  • 3 Mins Read
  • 〜 by The Vellum Team

This year began on an optimistic note with the economic growth being projected at 6.1% at the start of the year.

The above initial projections were quickly done away with following the economic effects of the COVID-19 pandemic and the economic growth projections have been lowered to a grim 1.5%.

Among the hardest hit by the COVID-19 pandemic are the SME’s and MSME’s however reprieve is along the way due to government interventions aimed at cushioning SME’s and MSME’s during this difficult time. The interventions come at the end of the two-week Cabinet Working Recess that ended on 28th August, 2020.

New Policy

Cabinet considered a raft of policy interventions geared towards economic stimulus during and after the subsistence of the Coronavirus Pandemic.

Cabinet approved the Kenya Micro and Small Enterprises Policy. The policy aims to provide an integrated business environment for the growth and development of stable and vibrant MSEs in Kenya. It recognizes the vital role played by MSEs in the economy, particularly with regard to wealth and employment creation.

Funded Credit Guarantee Scheme

As part of the Administration’s interventions aimed at enhancing access to credit by Micro, Small and Medium Enterprises (MSMEs) during the pendency of the COVID-19 Pandemic, Cabinet approved the establishment of a Credit Guarantee Scheme with an initial seed capital of Ksh. Ten Billion to be capitalized in two tranches of Ksh. 5 Billion in FY 2020/21 and FY 2021/22.

The State’s contributions are expected to be followed by contributions from Development Finance Institutions and participating commercial financial institutions; which are expected to boost the finding for the scheme to at least Ksh. One Hundred Billion. The Credit Guarantee Scheme is expected to be operationalized by mid-October, 2020.

Big boost for SMEs as KeBS steps in to ease operating challenges

In line with Cabinet’s actions in support of MSMEs, this week we have also seen the Kenya Bureau of Standards (KEBS) institute graduated charges and preferential treatment for MSME entrepreneurs.

Players in the local Micro, Small and Medium Enterprises (MSME) sector are set to enjoy a raft of preferential benefits from the Kenya Bureau of Standards (KeBS) following the passing of a policy geared at supporting their growth.

A communique issued by KeBS Board Chairman Eng Bernard Ngore, confirms that among other benefits, MSMEs will now enjoy graduated costs for all services offered by the national standards body.

The graduated application of fees payable to KEBS, will help meet the needs of start-ups’ and upcoming entrepreneurs including Jua Kali business operators. They have previously been paying applicable rates at the same rate as established corporates.

Evidence based interventions

Statistical data estimates that Kenya’s MSMEs contribute approximately 40% of the GDP with the majority falling in the informal sector. 

Conscious of the challenges facing upcoming entrepreneurs including access to affordable financing options, the application of graduated fees, Eng Ngore who is also the chairman of the National Standards Council said will help promote standards compliance.

He added that KEBS would also foster Intellectual property (IP) use among MSMEs, increase IPR related skills through education and training, and make the overall IP system friendlier to MSMEs by streamlining procedures, adequately structuring fees and costs, improving litigation and enforcement mechanisms.

Vision to power Big 4 Agenda

The new MSME policy by KEBS is envisioning a vibrant sector sustainably producing high quality products accessible to local and global markets that inspire consumer confidence and we shall provide them the necessary support to attain the goals outlined in the Big 4 Agenda. “This we shall undertake by providing a framework for enhanced focus on MSMEs in terms of preferred service provision, prioritization, collaboration and suitable and sustainable financial arrangements for the purpose of driving the MSME national agenda,” said Eng Ngore.

COVID Inspired Policy Intervention

KEBS commitments to the MSME sector come hot on the heels of recent rapid result interventions undertaken by the standards body to cushion the industry from the impact of the pandemic. As part of a sector response, KeBS recently developed and availed eight standards relating to goods and services for the containment of Covid-19 pandemic and availed them to manufacturers free of charge on the KEBS website.

Adopting Technology

Banking on technological advances in standards application, KEBS has also committed to supporting MSMEs to adopt ICT and adapt to the digital revolution by exploiting tech opportunities such as cloud computing and data analytics, among others. 

The extent of KeBS services offered to MSEs

KEBS shall provide services to the MSMEs for two of the three critical pillars of industry growth.

  1. Product development: KEBS shall be involved in standardization of innovations by the MSMEs, technical advisory services through quality assurance activities, product testing and equipment calibration, training and inspection services.
  2. Product Market access: KEBS shall provide product certification and system certification services to facilitate better market access of the MSMEs products and market surveillance to ensure a level playing ground for the MSMEs products in the market place.

Though MSMEs will still pay fees, the accommodation provided in graduated fees will hopefully aid cash flow management and enable them to stay afloat.

In the coming weeks, we expect to see more incentives for MSMEs unfold.