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Lake Basin Innovation and Investment Week Policy HackathonImpala Eco Lodge
November 21, 2019 @ 8:00 am - 7:00 pm
Young entrepreneurs and startups spend most of their time trying to convince customers on the suitability of their new products, convincing banks to provide them with loans and ideally convincing all stakeholders on why they need to trust their products and invest in their businesses. These and major external challenges make it difficult for startups to grow and scale hence prompting entrepreneurs to constantly seek opportunities within local governments and other systems to facilitate an enabling environment for their survival. As one of the key players in the entrepreneurship ecosystem, policymakers and government departments enforce laws that make it challenging for entrepreneurs to thrive. Furthermore, a dominant majority of county governments are shot of human capacity to design and implement resourceful policies that respond to the needs and challenges of entrepreneurs for adequate enterprise development.
Is there a comprehensive Enterprise Development Law in Kenya?
No! Kenya enacted the Micro and Small Enterprises Bill into Law in 2012. However, the Act only covers Small Enterprises with annual turnovers of between KES 500,000 and 5 million with employees between 10-49 people. Medium enterprises reported as comprising of businesses with a turnover of between KES 5 million and 800 million and employing 50-99 people are not covered under this act. This gap is far too wide. Consequently, counties are struggling to domesticate the incomplete legislation and making new policy regulations for trade, enterprise and cooperative development in reference to the same inadequate law.
Moreover, in 2017, the ease of doing Business in Kenya report indicated that the ease with which businesses could be registered had a bearing on the number of entrepreneurs who started businesses in the formal sector, leading to jobs and more government revenue. However, the process of starting a business is not still smooth as it involves seven procedures, taking lengthy 22 days and costs an average of 21.1 percent income per capita for both men and women. Although the country has generally made progress in making it easier to start a business, there are questions as to how easy starting a business is especially for SMEs. This ideally should be solved with a one-stop policy in the local governments and national government alike.
Some Key Areas of Need for Entrepreneurs and Start-ups
Kenya Economic Outlook Survey, 2016, indicated that MSMEs were facing inadequate capital, limited market access, poor infrastructure, inadequate knowledge and skills and rapid changes in technology. A dominant majority (29.1 %) of MSMES closed down because of shortage of operating funds. Other challenges validated in a research by Biashara Coach and Mentor include Local competition and lack of market access, Licenses, taxes and other new laws and government regulations, Lack of collateral for credit and Lack of skilled manpower.1
Why Care for Entrepreneurs and Start-ups
According to the World Bank non-resource intensive African countries such as Côte d’Ivoire, Ethiopia, Kenya and Senegal, were foreseen to continue to grow at more than 6 percent against the predicted 3 percent economic growth in Sub-Saharan Africa in 2017. The 2019 report shows that while the actual growth of the region declined to 2.3percent in 2018 from a previous 2.5 percent in 2017, countries such as Kenya, Rwanda, Uganda, and several in the West African Economic and Monetary Union, including Benin and Côte d’Ivoire recorded solid economic growth in 2018. The IMF asserts that the growth in such countries has been supported by infrastructure investment efforts and strong private consumption. More importantly, African countries are turning to entrepreneurship to support future growth which plays a vital role in the development of a vibrant and formal small business-sized sector. SMEs are proving critical in the present Sub-Saharan growth and promising to support an even wider scope in Africa’s growth in the future.
Kenya’s Case; In Kenya, SMEs play a key role in economic development and job creation. In 2014, 80 percent of jobs created were dominated by these enterprises. The term micro and small enterprises (MSEs) or micro, small and medium enterprises (MSMEs), is used to refer to SMEs in Kenya and under the Micro and Small Enterprise Act of 2012, micro-enterprises have a maximum annual turnover of KES 500,000 and employ less than 10 people. Despite the fundamental role SMEs play in the Kenyan economy, these enterprises are not able to operate to their optimum level due to the challenges they continue to face.
Practical Policy Intervention Areas
Our interaction with over five thousand entrepreneurs from across the lake region coupled with interpretation of data and findings from a collection of reports such as the ones quoted here in, there is an urgent need to have a one stop Enterprise policy for the lake basin region ecosystem to help cure the existing gaps and facilitate impactful growth of enterprises for ultimate sustainable development of the region. Some of the practical policy interventions include:
- Reduced burden on business formation and registration
- Intellectual Property Rights
- Access to alternative funding for SME’s and Start-ups
- Incentivised Tax Laws and holidays
- Inclusion of entrepreneurship within school curricula and tertiary education
The lake basin Innovation and investments week provides a rare opportunity where all entrepreneurial ecosystem players from across the region and the globe converge to share on the challenges and make resolutions on the possible solutions towards persisting bottlenecks. We see a possibility of maximizing the presence and rich expertise of stakeholders that shall be present in the gathering to generate a bespoke and need focused Enterprise Development Policy for the present and the future. This shall be done through a whole day Policy Hackathon in which entrepreneurs, fourteen county government trade and enterprise representatives, investors, government, the youth, policymakers, development agencies, ecosystem support organizations, and other stakeholders will brainstorm and generate the region’s most responsive and supportive Entrepreneurship Policy.
Key Areas; The policy shall focus on the following; Alternative Funding and Access to credit, Incubation and Acceleration, Capacity Development, Youth and Women Development and Employment, Use of technology, Legal Environment and regulations, Implementation Framework,
The LBIIW conveners are seeking partners and sponsors to support the Policy Hackathon and logistics and human capacity in the short run. For posterity, the team is looking to work with long term partners to facilitate post Hackathon processes including stakeholder forums in the lake basin counties, peer county reviews, expert reviews and implementation in the adopting counties as well as impact measurement.
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