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7/30/2019 Entrep Skills

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MOI UNIVERSITY

SCHOOL OF INFORMATION SCIENCES

3rd

YEAR SEMESTER I

GROUP NUMBER 1:

IRD 305: ENTREPRENEURSHIP FOR SMALL BUSINESS.

NAME ADMISSION NO. SIGNATURE

Munya Isaac IS/1218/10

Kibaru Willy IS/1225/10

Mbeda Odhiambo Kevin IS/1211/10

Fatma Mwarome IS/1229/10

Valentine Kigen IS/190/10

Masinde Angela IS/1228/10

PRESENTED TO: MR.CHEROTWO

DATE: 11TH

OCTOBER, 2011.


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QUESTION:

Read the Sessional Papers of 1992 and 2005 on Micro and Small Enterprise and Jua Kali

Development in Kenya.Group the promotional into 2

a. Hardwareb. Software

Evaluate their success against

1. Objectives2. How far have they attained these objectives3. Give reasons why they are not attained


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DEFINITION OF TERMS:-

SMEs: - The term SME covers a wide range of definitions and measures, varying from country

to country and between the sources reporting SME statistics. Although there is no universallyagreed definition of SME some of the commonly used criteria are the number of employees,

value of assets, value of sales and size of capital. In Kenya, these are businesses in both formal

and informal sector, classified into farm and non-farm categories employing 1-50 workers.

Jua Kali: - Small-scale craft or artisanal work, such as making tools or textiles.

Promotional Programmes:- Those activities that influence the growth of MSEs in Kenya.

Characteristics of SMEs

a. Small units, often rural-based and family-owned.b. Small independent enterprises, standing alone and producing for a well-defined

market.

c. Specialized firm, producing specialized products, selling to the international and/orlocal markets.

d. Rely on low cost raw materials, low energy costs, low labor costs, low division of labor.e. Flexible and often small production runs.f. Low capital formationg. Largely labor intensive units with low-level technologies; but note the emergence of

high skill and technology-intensive SMEs, especially in high technology industries.

Benefits of MSEs:-

a. Employment creation at relatively low capital costs.b. Income generation for the Government in terms of goods and services and the

Kenyan citizens in terms of the salaries and wages.

c. Poverty reductiond. Development of a pool of skilled and semi-skilled that are the base for industrial

expansion.

e. Contribution of increased participation of indigenous Kenyans in economic activitiesof the country.


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Although the MSE sector has played a major role, it has experienced many constraints thus

have not realized their full potential. Some of which are:-

i. Poor access to markets and financial servicesii.

Unfavorable policy, legal and regulatory environment.

iii. Poor implementation among the co-coordinating agenciesiv. Gender inequalityv. HIV/Aidsvi. Limited access to informationvii. Healthy and safety in work placesviii. Limited Linkages to large enterprises

The Government has committed itself by putting in place promotional measures geared

towards promotional and development of MSE sector. This includes publication of the

Sessional paper No. 2 of 1992 on small enterprise and Jua Kali Development in Kenya.

1. Sessional Paper No. 2 of 1992 on Small Enterprise and Jua Kalidevelopment in Kenya.

This Sessional paper provides a policy framework for promoting Small scale and Jua kali

enterprise development in Kenya based on the work of a special task force established in

March 1987 by the Government . The task reviewed policies to promote the sector.

The paper is divided into six chapters:-

a. Chapter one covers the role of the sector in Kenyan economy in relation to the overalldevelopment policy and strategy.

b. Chapter two highlights policy measures to improve the existing policy and regulatoryenvironment.

c. Chapter three focuses on Gender Specific Issues.d. Chapter four discusses policy measures to improve access to credit facilities.e. Chapter five discusses measures to improve provision of non-financial promotional

programs.

f. Chapters six provides agenda for action within a period of 12-24 months after adoptionof the paper.


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The General approach was to encourage MSEs to be involved in providing for its own needs

while the government acts as a facilitator by concentrating on creating infrastructural facilities

and economic environment in which entrepreneurs can emerge, develop and grow.

The Promotional Programmes are divided into two broad categories:-

a. Hardwarei. Providing Physical infrastructure and information networks in which small enterprises

can operate efficiently.

b. Software.ii. Investment Incentivesiii. Review of Actsiv. Gender Specific Issuesv. Policies that enhance growth of MSEs to be put in placevi. Educationvii.Marketingviii.Information Technology.

a. Providing Physical infrastructure and information networks in which smallenterprises can operate efficiently.

This would eventually enhance growth of MSEs. This objective could be achieved by:-

Encouraging local groups of artisans to form associations so as to benefit from RuralElectrification programme financed by the Government through the Electricity

development fund.

Provision of Industrial Land for construction of industries and installation of facilities suchas machinery.

Ensuring that the constructions of sheds for Jua Kali enterprises are undertaken. The Government to assist MSEs in preparation of development plans and projects for

improving infrastructural facilities under their jurisdiction.

The Government to some extend has attained its objective of providing physical infrastructure

and information networks in which small enterprises can operate efficiently .This is reflected

by the improved road network in the country, provision of Jua Kali sheds, rural electrification

though they have been hindered by corruption i.e. land grabbing and misappropriation of


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funds whereby the individuals entrusted with funds for the projects use it for their own

interests.

b. Investment Incentives by:-

Establishing Rural enterprise fund to finance Jua Kali entrepreneur and construction ofthe workshops

Investment allowances for establishing new factories outside Nairobi and Mombasa. Exemption from import duties on capital machinery for small enterprises located in

rural areas as long as the cost of machine doesnt exceed Kshs. 20M.

How far they attained:-

This has been attained because all the entrepreneurs even in the rural areas are enjoying the

funding through the Governments Youth and Women Enterprise funds and Financial

Institutions such as Kenya Women Financial trust and Faulu Kenya. Banks branches have been

opened up such as Equity Bank which offers loans to the people who want to start their

business and have no enough capital.

c. Review of Acts; by relevant ministries in consultation with AGs Chambers e.g. the Ministryof Trade, Ministry of Planning and National development. These acts are the Employment

Act, which restricts access by women in certain industries except for medical and

environmental reasons. Review of pertinent Acts which have either direct or indirect

impact.

Review of Licensing, agreements and building codes that hinder MSEs Businesses.

How far they have been attained:-

This has been successful as women are now accorded equal rights on Employment and

Access to funds for running businesses.

d. Gender Specific IssuesFemale entrepreneurs operating small businesses face a number of constraints which cal l for

urgent remedial action. Some of which are:-

Small Scale Enterprises development institutions need to adjust operations to take note ofwomens needs.

Most Financial institutions are in urban areas and there is need to provide smallerinstitutions in rural areas for revolving funds and mobile funds.

Appropriate technology to diversify women entrepreneurial activities should be put inplace.


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Women to be organized into groups so that they can support each other and benefit fordevelopment from development initiatives.

Women should be educated on their rights, on inheritance and how to form and get intogroups through legal awareness seminars.


The objectives have been achieved and more opportunities for entrepreneurial women have

been put in place. This is through the Maendeleo Ya Wanawake initiatives, the Women

Enterprise Fund, Kenya Women Finance Trust among others.

More women are now empowered through education which is done through seminars and the

media.

e. Policies that enhance growth of MSEs should be put in place;These are:-

Enhancing import restrictions in favor of tariffs Formulating a national export policy for SEE products and services. The government to see public procurement procedures and regulations to support

MSEs find markets for products in the public.


This has somehow succeeded as Licensing of SMEs has been simplified and licenses can be

attained at the District levels. Employment policies have been changed to accommodate

women. Also women now can access bank loans as compared to the past where the spouse had

to sign for them.

f. EducationThis is the training on specific business topics by providing a new venue through which

large firms can provide training and credit to the small enterprise with whom they deal

with.


It has succeeded because so many Institutions have been opened that offer courses on

specifically on entrepreneurship education.

g. MarketingMarketing is done through:

Linkages between large and small enterprises


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Exploitation of export market opportunities Entry of small scale enterprises into the service sector.


They have not succeeded because we are still importing products from other countries such as

cotton wool and phones from China which have flooded our market.

h. Information Technology

Market related information will be widely disseminated by District Industrial Development

officers (DID) in a manner that ensures that the target groups are reached.

Ministry of Industry to undertake studies on the implementation modalities of subcontracting

between large and small enterprise.


They have succeeded because the price of computers have been reduced as well as tax

2. Sessional Paper No. 2 of 2005 on Development of Micro and SmallEnterprises for Wealth and Employment Creation for Poverty Reduction.

This paper is divided into four chapters:-

1. Chapter 1: Introduction, an executive summary to the paper which gives the thrust of thepolicy framework.

2. Chapter 2: Profile of Micro and Small Enterprise in Kenya3. Chapter 3:Challenges to the Development of Micro and Small Enterprise Sector4. Chapter 4: Policy for Development of Micro and Small Enterprise.The promotional Programmes are categorized as below:-

A. Hardwarei. Infrastructure Development

B. Softwareii. Facilitating Business Registration through reduction of Cost and Time


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iii. Local Government Reformsiv. Review of Land Lawsv. Review of Labor Laws

vi.

Arbitration and Dispute Resolutionvii. MSE Act

viii. Markets and marketingix. Business Linkagesx. Policy framework for development of Skills and Technology

xi. Ensuring Gender Equityxii. Business management and Entrepreneurial Skill Acquisition

xiii. Information Management and Disseminationxiv. Tax regimexv. Formal and Informal Entry Barriers

xvi. HIV/AIDS

1. Facilitating Business Registration through reduction of Cost and TimeThe Government will decentralize registration of businesses starting from the provincial levels

then at the District levels. The Government will also undertake to computerize the process and

network activities in all relevant offices.


To some extent, it has been attained because small business permits can be obtained at the

district level, but it has to be improved in the sense that rural areas should have a centralized

place to cater for the entrepreneurs needs. The process of registering a business is long i.e. at

least two weeks and the requirements for starting and running a business in Kenya are more

compared to its counterparts in East Africa.

2. Local Government Reforms

Amendment of Local Authority Act (Cap. 265) to reflect limited and essential regulatorypowers by Local Authorities.


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Urban and town councils in collaboration with traders and relevant stake holders will berequired to develop clear guidelines for enforcement of the measures.

Local Authority by-laws will be reviewed and standardized to make them supportive topromotion of business.


The Local Government has strived to ensure that the businesses are operated in compliance to

the laid down rules and regulations e.g. the public health safety Licensing e.t.c. especially in

towns though the process is still hampered by corruption.

3.

Review of Land LawsThe review will continue for simplification and harmonization with the relevant pieces of

legislation. Physical planning Act, 1996, will be affected to encourage Local Authorities to

earmark land for MSE development.

How far they have been attained:

Not much has been attained because people have to travel from their rural areas to come and

register their lands in order to get their title deeds. There is also much corruption because thetop government officials have grabbed most of the land that do not belong to them.

4. Review of Labor LawsThe review will continue to make them more dynamic, supportive and responsive to the needs

of both employers and employees i.e. Employment Act (Cap. 226) and the Regulation of Wages

and Conditions of Employment Act. (Cap.229)


To some extent, they have attained because there is gender equality. Women nowadays are not

being discriminated at work places because of their gender. At least top positions are being

occupies by women. Also the minimum wage has been revised.

5. Arbitration and Dispute ResolutionMSE court will be established to dispense justice, and deal with small but non-trivial claims

emanation from the sector.


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This has been attained because the disputes are settled at the Industrial Courts. The rent

tribunal has also been set up to arbitrate issues arising from landlords and tenants.

6. MSE ActThe Government will formulate and enact an MSE specific legislation, the Micro and small

Enterprises act to give the sector legislative recognition and provide an appropriate legal

framework supportive to its growth.


The Act is still in the parliament, it has not been implemented yet.

7. Markets and marketing The Government will allocate 25% of its procurement requirement to the SME sector so

as to encourage growth.

The Government through public-private sector partnership and in consultation withMSE operators and stakeholders will encourage sub-contracting arrangements

between large and medium firms and the MSEs through provision of incentives such as

tax rebates and duty waivers to encourage the large firms to participate in the

arrangement.

Government will restrict dumping of Goods into the country and within the frameworkof Economic Recovery Strategy will increase the per capita of the citizenry that are the

ultimate source of increased aggregate demand.

Government will facilitate marketing of MSE products in both local and Internationalmarket through Export Promotion Council and Kenya Missions abroad.

Local Authorities to continue to implement creative approaches aimed at promotingmarketing of MSE products e.g through marketing in public parks on specific days.


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How far it has been attained:-

To some extend this has been attained as Kenya has been widely marketed abroad through the

Tourism Promotion Board, Export Promotion Council and the Kenya Missions abroad. Kenyan

products e.g. wood carvings, the Kisii soapstone have gained popularity worldwide.

8. Business Linkages The Government will provide incentives to the private sector to invest in areas that

enhance development of business linkages between MSEs and large enterprises.

The Ministry of Finance will work out modalities for providing appropriate fiscalincentives to both large and small firms to encourage market/supply linkages to MSEs.

To encourage linkages between the MSEs and large enterprises, the Government willidentify suitable zones with basic infrastructure, which will serve as incubators to

improve the image of MSEs and their visibility.

The Government will put in place mechanisms that will promote linkages between MSEsand Agricultural sector to increase rural incomes and reduce poverty

How far it has been attained:-

The government has attained by collaborating with other countries so that they can be in a

position to export their finished products. Also ready market has been developed. Prices of

products can be known through the phones to determine if there is a profit or not.

9. Policy framework for development of Skills and Technology

The policy framework will seek to enhance their ability to adopt and adapt new technology,improve the capacity of institutions that support technology development, increase overall

access to information on available technology and acquisition of technological skills.


Most of the institutions have offered to train their employees on the matters that concern

entrepreneurship to prepare them just in case they lose their jobs, they can start their own

businesses.

10.Ensuring Gender Equity The policy framework will galvanize the creative and productive potential of women.


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Government will pursue gender responsive policies that increase equal access to financialservices for both men and women.

Government will build institutional capacity of ministries, parastatals and Governmentdepartments for gender integration and promote greater access to education,entrepreneurship and technological development.

The Government will pursue policies to empower women, increase their access to creditand build institutional capacity of support organization for gender mainstreaming.


It has been attained because right now women can apply for loans without their spouses

signature. Education also has been offered to girl child without any discrimination, jobopportunities too have been offered.

11.Business management and Entrepreneurial Skill Acquisition The Government will encourage Universities, Polytechnics, technical institutions and other

MSE support organizations to develop certified demand driven courses for

entrepreneurship and business management.

Government will introduce entrepreneurial development programmes in schools andother training institutions in order to develop a widespread entrepreneurship culture.

A new policy framework to promote cost- effective Business Development Services (BDS)programmes that are tailor made to specific range of needs of a range of MSE

entrepreneurs and business sectors.


Many universities like Kenya Polytechnique University College and college are now offering

courses pertaining to entrepreneurship. On the other hand, as a nation we have to play our role

such training our children on how to become businessmen and women when they grow up and

also try to nurture their talents instead of discouraging them.

12.Information Management and Dissemination The government will encourage private sector investment in information centers for MSEs

and support stakeholders initiatives targeting dissemination of information generated

within the sector.

The Government will support periodic baseline of the sector.


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Measures will be put in place to strengthen existing institutions and documentation centersthat specialize in MSE related information.

The Government will encourage and provide incentive on private sector initiative towardsestablishment of an information clearing house that will ensure that relevant informationabout MSE Sector is collected, organized, processed and disseminated according to the

needs of different stake holders.


The government is building a data centre to store all vital information. The government has

also implemented fiber optic to enable information transfer and management and

dissemination. The Government also through financial institutions e.g. Faulu Kenya have been

offering training to the small scale traders on how to start and run successful businesses bothin rural and urban areas.

13.Tax regimeGovernment will continue with Tax reform aimed at improving transparency and efficiency of

taxation, strengthening tax collection and harmonizing the tax system. Mechanism will be put

in place to ensure that the MSE can pay tax that allows them to fulfill their tax obligation and

thrive at the same time.

How far they have been attained:-This has been attained because the Government has zero-rated taxes on the products such as

computer, Motorcycles and cell phones. This has made the products affordable for the

Entrepreneurs.

14.Formal and Informal Entry Barriers

The Government will work closely with the private sector to and other stake holders to ensure

promotion of good governance, ethical trading and rule of law thus the capacity of the MSE

associations will be strengthened to be able to play a self-regulatory role more effectively.


To some extend this has succeeded because the Government has made an effort to rid the

cartels who try to sabotage entrepreneurs e.g. the Mungiki


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15.HIV/AIDS

MSEs will be facilitated to take advantage of the all prevention, care and controlprogrammes under the National Aids Control Council (NACC) strategic plan.

MSEs will be encouraged to participate fully in HIV/AIDS activity in the constituency AIDSCommittee levels in their respective localities.

Measures will be put in place to encourage insurance companies to develop schemes forMSEs e.g. health insurance.

MSEs will be encouraged to insure their properties.How far they have been attained:-

This has been successful because through National Aids Control Council and other partners,

more Kenyans are aware of HIV and related complications. Infections have reduced and the

Stigma related to HIV has also reduced. Schools and Institutions of Higher learning have

introduced HIV aids modules in their syllabus. They have management to offer training to

people with HIV/AIDS, there is also the issue of stigmatization which has made people that

infected with the disease to accept themselves in the society. There are also trainings on how

these people feed, and what types of food that should be eaten. And the exercises that should

be done.

16.Infrastructure Development The Government in collaboration with relevant stakeholders will encourage more

private sector participation and management of market stalls and worksites for MSEs

through leasing of land to developers at concessionary rates and granting tax incentives

to such developers.

Government will introduce measures to privatize existing sheds in order to facilitatetheir efficient management and utilization.

The Central Government in collaboration with the local Authorities will promote theissuance of Temporary Occupation Licenses for a longer period of time to overcome

insecurity of tenure of land allocated to MSEs.

Issuing of short- term leases to the individual MSE entrepreneurs.


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MSE associations will be encouraged to adopt a Community Land Trust arrangement forthe benefit of the members so as to promote investment and infrastructure

development within MSE sites.

How far they have been attained:-This has been achieved. A more conducive environment has been created for the traders

e.g. the Muthurwa market in Nairobi. Stalls have been build and leased out to traders at

minimum fee. The Government has identified empty spaces in various parts of the

country and allocated the traders e.g. the Ngara Market and Masai market at Kijabe

Street.

Conclusion

In conclusion, although much has been done by the Kenyan Government to promote SMEs,

achievements have been minimal and many SMEs have collapsed. This is due to the rampant

corruption and lack of proper training of the entrepreneurs in the Country. The Government

should introduce courses in schools and institutions of higher which mould student talents

right from primary school to the Tertiary level so that they learn to be self reliant and do not

depend on white collar jobs only. Corruption cases should be dealt with severely so as to curb

the practice.

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