Kenya, a democratic multi-party nation of about 39 million people, is in eastern Africa. It is the center of economic and financial activities, handling imports and exports in that region of Africa. Unfortunately, about half of the country’s population is poor. A greater number of people (80%) live in rural areas. The growth rate in population has not matched growth in economy.

Kenya, a democratic multi-party nation of about 39 million people, is in eastern Africa. It is a centre of economic and financial activities, handling imports and exports in that region of Africa. Unfortunately about half of the country’s population is poor and a majority of people (80%) live in rural areas. The growth rate in population has not matched growth in economy, resulting in a decline in income per capita.

Similarly to most other developing countries, small and medium enterprises in Kenya, play a key role in national development. Growth in development is dependent on prevailing peace in a region. It is worth noting that SMEs are both a solution for and means to attain most of the UN` s Millennium Development Goals and the Global Targets for 2015, which Kenya supports. SME’s entrepreneurship alleviates poverty and its survival depends on development partnership, an educated, healthy population that has equal rights for all and respect for gender issues. This is why government involvement is essential through its mobilisation of a supportive framework for youth and women getting involved in entrepreneurship to fight poverty.

An entrepreneur is essentially one who decides to take a risk by capitalising on an available opportunity to start a business entity, becoming self-employed and creating employment opportunities for others. The enterprises offer either goods, services, or both in the market. Individuals or private groups become entrepreneurs with the aim of making a profit but may also at the same time solve social problems, thus having a double bottom line.

The establishment and management of business enterprises can be an uphill task for many, including even the most enthusiastic of entrepreneurs, yet the benefit goes beyond the individual. Significant progress in SME’s entrepreneurship in Kenya could be achieved by an increase in sustainability and the maximisation of profitability. Achieving this would involve more inclusive participation in guidance and the provision of necessary resources by government.

The growth and expansion of entrepreneurship within a country can lead to it becoming highly economically developed. Part of this is due to creation of wealth and jobs. When people have the relevant entrepreneurial skills and are given the right environment, the entrepreneurial spirit is encouraged. The government, local communities, and the international community can be involved to foster entrepreneurial development. The government’s involvement would be in an effort to foster development and reduce unemployment. The main government ministry responsible for SMEs in Kenya is the Ministry of Trade.

The Kenyan government has made an effort to update outdated and rigid policies and regulations to address contemporary life. In other situations Kenya tends to hold on to some colonial era law. The ease of starting and running an enterprise for both locals and foreigners is a particularly encouraging advantage. Business registration should be an easy process and taxation realistically set. The Kenyan single business license can be processed within a day and can also be done online. Secondly, business name registration takes not less than 30 days to ensure the name to be registered has not been used in the same given location. A Trade License with the Ministry of Trade is also required before conducting business.

The government can be of great assistance in guidance on inclusive funding opportunities as many potential entrepreneurs are hindered by lack of start-up or expansion capital. The banks demand collateral that the majority of SME entrepreneurs lack, and when available the loans are very costly as the interest rates can become unmanageable. The government should have a way to assist those with promising business plans through government organisations or by linking them to private financial firms, either locally or even internationally. Among the government funding available is the Joint Loans Board Credit Scheme offered by the The Ministry of Trade. Another government institution, Kenya ICT Board gives funding assistance to entrepreneurs in technology. Women Enterprise Fund (WEF) started by the Government of Kenya in 2006 has been funding women through financial institutions. The funds are limited and only a very small percentage of people benefit. As detailed under the Vision 2030 initiative, the government hopes to set aside more funding, which might have a bigger impact.

There are many micro finance companies (MFI) in Kenya just like in several other developing countries. These MFIs are funded by concerted funding locally and internationally. Their main advantage is the non-collateralized loans that they give. This means that many low-income persons including those in SME entrepreneurship can benefit. Their limitations are the low amounts of loans, and the groups that must be formed in order for members to guarantee one another. The other discouraging issue is that should a member default on a loan, fellow group members are liable for the full loan amount.

The Micro-Finance and the Sacco Bill was passed by the government. Its purpose is to regulate the activities of these financial institutions to protect consumers.
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By Rwarui

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