The government, through the State Department of Micro, Small, and Medium Enterprise (MSME) Development, says it is shocked at the rate at which small businesses in Kenya are collapsing which sounds like the biggest irony because they know exactly why they are collapsing.
“We are so concerned at the rate at which some MSMEs are closing. It is really alarming and it is now forcing us to step up our efforts in terms of nurturing these MSMEs so that they cannot wind up,” said Festas Wangwe, director of the central planning and monitoring unit in the State Department of MSME.
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The “shocking” revelations by the government that it is “shocked” come at a time millions of SMEs in Kenya have been sinking due to the high cost of doing business in the country coupled with numerous taxes imposed on them by the Kenya Kwanza Government.
“There are certain policies that we have to address that are really affecting the MSMEs ranging from multiple taxes especially from both from national and county governments. We have efforts we are putting in place to harmonize this so that MSMEs can be supported,” added the official from the department.
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Stats from the Kenya National Bureau of Statistics (KNBS) indicate that at least 2.2 million SMEs shut down operations in Kenya in 5 years to 2016. This means that at least 450,000 of them were shutting down annually, 30,000 monthly, and 1,000 daily.
According to the Kenya Institute for Public Policy Research and Analysis, SMEs contribute to over 90% of the total labor force and play a key role in poverty reduction and economic development. They are also a source of innovation, competitiveness, goods and services, and entrepreneurial skills. There are over 7.4 million SMEs employing approximately 14.9 million Kenyans in various sectors of the economy.
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