Kenyan Banks have committed funding of Kenya shillings 450 billion to Micro, Small and Medium Enterprises (MSMEs) over the next three years from 2025. SMEs play a key role in national economies around the world, generating employment and value added and contributing to innovation. SMEs are central to the efforts to achieve environmental sustainability and more inclusive growth. However, these contributions vary widely across firms and across countries and sectors. Better access to global markets and knowledge networks can strengthen SMEs’ contributions, but trade and investment barriers undermine SME participation, and poor physical and ICT infrastructure prevents SMEs from operating efficiently and accessing international markets at competitive costs. Digitalization offers new opportunities for SMEs to participate in the global economy, but SMEs are lagging behind in the digital transition and disruptive effects need to be considered.
In many countries, and in particular the countries under the umbrella of Economic Cooperation and Development (OECD), governments are facing the challenges of low growth, weak trade and investment, and rising, or persistently high inequality among their citizens, issues which should be addressed for peaceful, harmonious and sustainable development. They also face a growing dissatisfaction among citizens with the current state of affairs, which is also manifesting itself in the form of a backlash against globalization and technological change. Against this backdrop, there is a need to create the conditions that enable the benefits of open markets and technological progress to be enhanced and shared more broadly across the economy and society.
MSMEs play a key role in national economies around the world, generating employment and value added. In the OECDs, MSMEs are the predominant form of enterprise, accounting for approximately 99 percent of all firms. They provide the main source of employment, accounting for about 70 percent of jobs on average, and are major contributors to value creation, generating between 50 and 60 percent of value added on average. In emerging economies, MSMEs contribute up to 45 percent of total employment and 33 percent of GDP. When taking the contribution of informal businesses into account, SMEs contribute to more than half of employment and GDP in most countries irrespective of income levels and can contribute to economic diversification and resilience. This is especially relevant for resource-rich countries that are particularly vulnerable to commodity price fluctuations. MSMEs have effective contribution to innovation dynamics, which has increased in recent decades, as income growth, more niche market demand and changing technologies have enabled them to strengthen their comparative advantages and reduced the structural disadvantages stemming from resource constraints and limited ability to reap economies of scale. Dr Giti is an urban management, public – private partnerships (PPP) and environment specialist. mutegigiti@gmail.com , @danielgiti
Dr. Daniel Mutegi Giti 