Kenya: MSEs Need Technological Innovation to Continue Sector Expansion

Notwithstanding that the Micro and Small Enterprises sector (MSE) has had remarkable expansion in Kenya over the years, its contribution to Kenya’s gross domestic product (GDP) has stagnated at around 18.4 percent for the last decade.

Kenya’s National Council of Science and Technology (NCST), secretary and chief executive officer (CEO), Prof Shaukat Abdulrazak stated that:

“Despite the numerous constraints and challenges, the SME sector has registered tremendous expansion over the last decade. The sector accounts for 74 percent of the total employment in the country; a corresponding contribution of about 18.4 percent of the cross domestic product (GDP).”

According to the 1999 MSE baseline survey, the sector employs 2.4 million persons. This increased to 8.3 million in 2009 as per the 2010 economic survey, translating to an average of 590,000 jobs created annually. The level of employment in the MSE sector in 2010 accounted for over 70 percent of the total labour force in the country.

Professor Abdulrazak, who was speaking at a technological and business clinic for micro and small enterprise at Nakuru, Kenya, articulated that MSEs are a key stimulant to the achievement of Kenya’s socio-economic blue print, Vision 2030.

Kenya, like any other developing country, is faced with a formidable challenge of unemployment largely due to slow economic growth and a rapid labour force expansion.

The modern formal sector and the traditional agricultural sector are not able to absorb the current inflow of about 600,000 new entrants into the labour market annually.

The rural non-farm and urban informal sectors are, therefore, seen as offering an option to this problem. The challenge has been to stimulate employment growth in the sector commonly known as the Jua Kali sector.

Professor Abdulrazak said that, unfortunately, the sector suffers numerous challenges and constraints that inhibit its vertical growth. Key among these is the poor quality of products and limited product range, which result in low competitiveness. The poor quality can be attributed to the low levels of technological innovations, technology acquisition and adoption among the MSE operators. Specifically, MSEs suffer a weak environment that hampers coordination and transfer of appropriate technology.

Professor Abdulrazak commented:

“Technological advancement in any sector depends on the level of efforts made towards finding new products and processes that target the needs of the market. This can be achieved through research and development, or adoption and adaptation of technology available elsewhere.”

The NCST is mandated to advise, promote and coordinate matters of science and technology in Kenya. As its CEO, Professor Abdulrazak said low levels of education and technical training of some of the MSE operators; and inadequate financial capacity to acquire available technology and infrastructure, sometimes exhibits them from seeking and using appropriate technology.

Moreover, institutions such as youth polytechnics and other middle level colleges which are expected to provide technical services to MSEs have been found to be weak and lacking in specialized capacity to meet the needs of the sector. Institutions with such capacity have not put in place adequate programmes needed to create links with MSEs in order to facilitate appropriate flow of information. Consequently, the vast amount of available technology is rarely accessed by MSEs.

It must, therefore, be recognized that growth and development of the micro and small enterprise sector in Kenya will largely depend on the quality and range of products. This will, to a large extent, depend on the level of technological innovations employed in the product process.

Professor Abdulrazak encouraged the sector to take advantage of the demonstrations and other information they will gather from the exhibition on micro and small enterprise to adopt and adapt new technology in order to enhance production capability and improve on the quality of products.

The Kenyan Government has put in place mechanism to help MSE improve their business using technological innovations that would add value to their products, not only for local market but for regional and international markets.

One of NCST’s key functions is to administer the science, technology and innovation (ST&I) grant on behalf of the Government of Kenya. This grant is one of the government efforts towards building capacity in science, technology and innovation. This is a competitive grant that supports researchers, innovators, research facilities and support of conferences. To date the ST&I grant has supported a total of 318 research and innovation projects in different categories.

A few weeks ago the Council hosted the 4th national conference on dissemination of the results and exhibition of innovation whose theme was “Improving Community Livelihood through Science and Technology”. The conference attracted 600 participants from Kenya and various countries, 42 innovations, several research institutions and universities.

During the week long business clinic, the participants shared their roles, strengths and challenges besides creating a strategic network. As a  former deputy vice chancellor of Egerton University, Professor Abdulrazak promised that in future, universities will be holding a joint innovation with MSE exhibitions to broaden the catchment in which related sub-sectors in business, industry, academia and research institutions are brought together.

The ST&I sector plan underscores the importance of enhanced efficiency in the wholesale and retail supply chain. This can be achieved through the facilitation of development and acquisition as well as improved appreciation of production processing and market access technologies skills.

NCST promotes the following solutions;

• the provision of technology-based business incubation support services,
• facilitation of acquisition,
• application of one stop technologies,
• a unified taxation system to reduce cost of doing business
• the provision of start-up capital for the commercialization of technopreneurship ideas.

Professor Abdulrazak challenged research institutions and technical training institutes to urgently put in place programmes that can help establish strong linkages with MSEs. “It is through such initiatives that we can provide steady technological advancement in the MSE sector.” He went on to say that the country needs to explore more avenues for providing steady alternative sources of technology through the import of relevant technologies from other countries such as India, South Korea, Pakistan, China, among others.

Similarly, he pointed out the Government should consider providing a duty waiver on certain basic engineering machines so as to make them easily accessible to MSEs.

However, he said the Government needs to consider increasing funding for research and development (R&D) particularly in areas targeting the MSE sector. “Facilitating activities such as reverse engineering can greatly help in generating home grown MSE-friendly technologies.”

On intellectual property rights, he said the country has lost greatly in the area of intellectual property such as patenting of the Kiondo and the Kikoi. “There is, therefore urgent need for the Kenya Intellectual Property Institute (KIPI) to make deliberate efforts to introduce an MSE-friendly patenting programme that can quickly and ably protect Kenyan inventions and innovations.”

The exhibition brought together over 350 exhibitors and more than 11 collaborators displaying various genres of micro business using various types’ technologies.