Focus on MSMEs in Kenya as a policy priority for Government has been evident since the dawn of independence. The first real drive towards Kenyan-owned enterprises was highlighted in the infamous Sessional Paper No. 10 of 1965 on African Socialism and its Application to Planning in Kenya. This was followed by the formation of the Kenya Industrial Estates (KIE), established in 1967 as a subsidiary of Industrial and Commercial Development Corporation (ICDC) with a major role of promoting indigenous entrepreneurship by financing and developing small scale and micro enterprises.
As the number of locally-owned enterprises increased, they began to mainstreamed in Government economic planning as a priority sector. This was initiated through the Development plan of 1974-1978 but concretised through the 1986 Sessional Paper No. 1 on Economic Management for Renewed Growth which recognised and highlighted the importance of Micro and Small Enterprises as a means of strengthening Kenya’s economic development. The major output from this drive was a taskforce paper entitled `Strategy for Small Scale and Jua Kali Enterprise Development in Kenya’.
This paper was subsequently translated into a policy framework through the Sessional Paper No 2 of 1992 on Small Enterprises and Jua Kali Development. This was the first to exclusively address small enterprises, defining them as enterprises that employ between 1 & 50 employees. In this policy paper, the Government acknowledged the negative effects of its tight controls on the sector, and called for support to the sector by all stakeholders.
The next policy paper on MSME Development came through the Sessional Paper No. 2 of 2005 on Development of Micro and Small Enterprises for Wealth and Employment Creation for Poverty Reduction. This paper highlighted the constraints to MSME development including access to information, financial services, land and infrastructure, skills and technology, licensing and other trade, labour laws, forward and backward linkages. The Sessional Paper proposed how these constraints could be addressed including a proposal for A Small Business Act which resulted to the Micro and Small Enterprise Act being passed by Parliament in 2012. This set up new rules and institutions to support micro and small enterprise development in Kenya.
An important milestone in economic planning for MSMEs in Kenya can be seen through the Vision 2030. This a long-term development plan that seeks to transform Kenya into an industrialized middle-income country, providing a high quality life to all its citizens by the year 2030. The MSME sector has been identified and prioritized as a key growth driver for achievement of the development blue print and has subsequently been incorporated into the respective Medium-Term Plans.
The most recent advance in Government policy for MSME Development can be seen through the Kenya Industrial Transformation Programme (KITP). This is an initiative launched by the Ministry of Industry, Trade and Cooperatives in 2015 and seeks to operationalise the economic pillar of Vision 2030 through a strategy designed to accelerate the development of industries that will drive the country’s economic growth. The fifth pillar of this strategy is ‘Develop Kenyan SMEs by supporting rising stars and building capabilities with model factories’.