In collaboration with New York University and the SME Advisory Unit, Executive Office of the President, FSD Kenya is undertaking a study of small firms as part of a global study across seven (7) countries (Kenya, Ethiopia, Uganda, Nigeria, Colombia, Indonesia & Fiji). Small firms are defined as having between 1-20 employees, occupying a niche between medium/large firms and micro, survivalist firms.
They represent an important driver of inclusive growth, due to their proximity to local economies and their contribution to sectoral growth and employment.
The Kenya SFD fieldwork kicked-off in the last week of October 2021, and was marked by a Policy Workshop bringing together a range of key stakeholders from public and private sectors and development actors who are closely involved in small firms. The workshop was co-convened by FSD Kenya, the SME Advisory Unit and the State Department for Industrialization.
In her introductory remarks for the workshop, Anne Mutahi, Senior Advisor to the President on SME Development, discussed the importance of the MSME sector in terms of its contribution to Kenya’s GDP and economic progress.
She further acknowledged that strengthening this sector was critical and would be achieved by i) gaining a deep understanding of the drivers behind MSME behavior and decision-making, and ii) identifying the support needed from policymakers and non-state actors. Recognizing that lack of data in this sector has obscured critical information for a long time, Anne welcomed the intentions of the SFD research study in providing clarity on the MSME sector and hoped that the outcome of this important research would inform on policy more precisely.
PS Amb Kaberia from the State Department for Industrialization reiterated the important role that MSMEs play in creating employment, fighting poverty and enhancing livelihoods, and recognized the great interest by researchers and scholars in studying this sector, which has resulted in numerous studies being undertaken.
He emphasized a need to create a national research agenda for MSMEs to avoid duplication and strengthen the synergy between studies targeting this sector, as well as creating a repository for research which can be widely accessed. He further highlighted the importance of putting research into action, placing high expectations on the SFD research in making a difference for the good of the MSME sector in Kenya.
His final words echoed his and the State Department’s support of the SFD research and its resultant recommendations.
Breakout room discussions were held with the 30 or so participants attending the workshop. The discussions addressed barriers to small firm growth across different sectors of the economy and potential solutions.
The discussions highlighted the need for a nuanced, approach taking into account sector-specific drivers of small firm growth. For example, while capacity/skills and access to finance were cross cutting, the agro-processing breakout room focused on the role of group-based enterprises vs individuals, and gender (especially in relation to control over land) as key dimensions; for light manufacturing, key issues that emerged were working space and technology; in the services sector, household safety nets were highlighted as a high priority (stimulating demand while de-risking business operations), as well as the potential contribution of digital tools and technology.
In sum, the rich discussions at the Kenya Small Firms Diaries policy workshop will provide important context for the interpretation of the Small Firms Diaries research findings and improve their relevance for innovation and policy to support small firm growth.