The government is preparing to unveil a revised Micro, Small and Medium Enterprises (MSMEs) policy designed to transform the sector into a central pillar of job creation, economic growth and inclusive development under the Bottom‑Up Economic Transformation Agenda (BETA).
Principal Secretary for MSMEs Susan Mang’eni said the sector has already registered progress under the current administration, with reforms targeting long‑standing challenges such as informality, stunted growth, harassment of traders and high business costs. “The MSMEs programme was established by this administration because we recognised the contribution that MSMEs make to our economy, contributing about 40 per cent to GDP and accounting for nearly 90 per cent of businesses in Kenya,” she noted.
Despite their dominance, many enterprises remain small and informal, creating what Mang’eni described as a “missing middle” in the economy. The new policy, now awaiting Cabinet approval, prioritises formalisation, improved regulation and expanded access to opportunities.
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A key pillar of the reforms is ending what Mang’eni termed the “criminalisation of work.” She explained that informal workers such as market traders and boda boda operators are often treated as disorganised or burdensome, yet their jobs sustain families and communities. “These are very important jobs in our country. This work gives opportunities to many Kenyans to earn a living, pay rent, send their children to school and sustain their families,” she said.
The State Department has partnered with county governments to designate trading spaces and agree on operating times, reducing confrontations between local authorities and traders. “We have seen these running battles reduce significantly because of this co‑engagement,” Mang’eni added.
The revised policy also seeks to ease entry and formalisation for small businesses. Previous requirements that 30 enterprises were needed to form a registered cluster have been reduced to five, enabling artisans and suppliers to organise more effectively. “That was a major milestone. It has helped us to organise artisans and suppliers who are now able to open bank accounts, access credit and compete for contracts, things that were very difficult before,” she explained.
Since the reforms were introduced, more than 2.5 million enterprises have been registered in the past three years, boosting visibility and access to markets. Mang’eni said formalisation allows financial institutions to better understand businesses, making it easier for them to access loans and grow.
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She also highlighted progress under the Recognition of Prior Learning (RPL) framework, which certifies workers with informal skills through institutions such as TVETs and the National Industrial Training Authority (NITA). “One of the main reasons our skilled artisans could not work in certain sectors was because they lacked certification. Now, through RPL, we assess their skills and award certificates that open doors to bigger opportunities,” she said.
Through the National Youth Opportunities Towards Advancement (NYOTA) programme, the government aims to support at least 20,000 young people with skill certification under RPL, with backing from development partners including the World Bank.
Mang’eni said the revised MSME policy represents a shift from survival‑focused micro enterprises to growth‑oriented, competitive businesses capable of creating sustainable jobs and absorbing Kenya’s expanding youth population. “Our goal is to build an MSME sector that grows, formalises and creates jobs. We have made significant progress, but we will continue working with partners at all levels to ensure that every Kenyan with an entrepreneurial spirit has the opportunity to succeed,” she affirmed.
By Masaki Enock
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