The World Bank has approved a $50 million International Development Association (IDA) credit to increase scale innovation and productivity amongst Kenya’s small and medium enterprises.
The money, under the Kenya Industry and Entrepreneurship project (KIEP) is expected to benefit some 33,050 individuals and 2,393 firms.
It is also expected to support the ambitious development targets outlined in Kenya’s Big Four development agenda and Vision 2030 that require significant growth in private sector jobs and overall productivity.
According to data from the Kenya National Bureau of Statistics (KNBS), micro, small and medium enterprises (MSME) sector has evolved to a highly vibrant and dynamic sector of the Kenyan economy over the last few decades. Although a big number of MSMES are undocumented but they still conduct businesses operating informally in Kenya.
The biggest proportion of net income generated by MSMEs is injected back into the business as re-investment and also spent to meet household and family needs. In order for the businesses to grow and transit from micro to small and small to medium, there is need for increase savings and re-investment by ploughing back the income.
The value of the MSME’s output is estimated at Sh3,371.7 billion ($33.352 million representing a contribution of 33.8 per cent in 2015.
Manufacturing is the highest by contributing 24.3 per cent of the MSME”s gross value added. Wholesale and retail trade, Transport and storage, and Education services also rank high by contributing 22.8, 15.4 and 7.3 per cent, respectively to the gross value added. Unlicensed establishments contribute 10.4 per cent of the MSME’s gross value added.
According to the Ministry of Industry, Trade and Cooperatives, through the Kenya Industrial Transformation Program, prioritizes technology and innovation as the cornerstone for national industry development and the role that private sector firms play in driving Kenya’s industrialization.
World Bank Country Director for Kenya Diarietou Gaye, said that the bank is committed to supporting Kenya in creating employment and business opportunities as part of the county’s wider strategy to fast-track economic growth.
“While Kenya remains a top innovation leader in Africa, it still ranks 80th out of 127 countries in the 2017 Global Innovation Index and we are partnering with Kenya as it works to improve its human capital, technology and knowledge outputs.” She added.