MINISTRY OF INDUSTRIALIZATION, TRADE AND

ENTERPRISE DEVELOPMENT
State Department for Industrialization

Sessional Paper No. 05 of 2020

on
Kenya Micro and Small Enterprises Policy
for
Promoting Micro and Small Enterprises (MSEs) for Wealth and
Employment Creation

September 2020
Foreword
Micro and Small Enterprises (MSEs) provide enormous opportunities for socio-economic
transformation of Kenya’s economy. While the Sector has received policy attention since 1965, it is
yet to fully achieve its full potential.
Development of this Sector therefore, is central to realization of national development goals anchored
in the Kenya Vision 2030 and the country’s Big Four Agenda. The Sector is particularly important
for providing job and income opportunities for economically excluded segments of the population
including youth, women, persons with disabilities and low-skilled persons, who experience
disproportionately high unemployment.

The formulation of this policy utilized extensive review of literature, relevant surveys and critical
review of past and existing policies. The reviews were guided by the aspirations and provisions
articulated in the Kenya Vision 2030, the Constitution of Kenya and other regional and global
development Agenda.

Despite past policy interventions, there are some persistent challenges and emerging issues impeding
development of the Sector. These include access to affordable finance, access to markets, obsolete
technology, lacuna focusing on the ecosystems for start-ups, regulatory environment and institutional
coordination. Despite these challenges, the devolved governance structure under the Constitution
presents development opportunities of decentralization of public services and roles of the county
governments in development of infrastructure, enterprises and trade. There are also new sector-level
national policies that provide opportunities for development of MSEs. In this regard, there is need to
mainstream emerging issues and developments at the regional and global levels. The East African
Community (EAC) Vision 2050 recognizes role of MSEs in regional industrial development agenda,
underscoring the need for enhanced competitiveness through innovation and value addition to tap
into intra and inter-regional trade opportunities. The AU Agenda 2063 aims to transform and grow
the industrial base of the African Continent through value addition of natural resources and sectoral
productivity growth, focusing on MSEs and agri-business. At the global level, the SDGs recognize
broader socio-economic significance of MSEs and prioritizes development of the Sector through
enhanced innovation and competitiveness.

The Policy’s goal is to provide an integrated enabling business environment for the growth and
development of productive MSEs in Kenya that make significant socio-economic contributions to the
economy through provision of decent jobs and source of quality products. The objectives of the Policy
are anchored on ten (10) challenges that emerged from critical review of literature and past policies,
as well as extensive stakeholder consultations across the country targeting MSEs, policy
implementing institutions, development partners and private sector representatives. The ten (10)
objectives include: - (i) Entrenchment of entrepreneurial culture; (ii) Skills and capacity development;
(iii) Access to domestic and export markets (iv) Access to a diversified and affordable range of
financial products and services; (v) Access to decent and affordable infrastructure; (vi) Facilitation
of start-ups; (vii) Promotion of formalization; (viii) Enhanced coordination and implementation of
support programmes targeting development of the Sector; (ix) Conducive regulatory environment at
the national and county levels; and (x) Mitigation of business external risks including those that are
emerging and cross-cutting in nature.

i
The Policy interventions therefore are aligned to these objectives and seek to enhance
competitiveness, productivity and sustainability of MSEs in supporting the economy through
provision of quality goods and services, decent jobs, incomes and wealth creation.

Ms. Betty C. Maina, CBS

Cabinet Secretary
Ministry of Industrialization, Trade and Enterprise Development

ii
Preface and Acknowledgments
The Kenya Micro and Small Enterprise Policy on “Promoting Micro and Small Enterprises
(MSEs) for Wealth and Employment Creation” outlines the direction that the Ministry of
Industrialization, Trade and Enterprise Development is taking to make the MSE sector competitive
and productive in realizing the Country’s vision 2030 and the Big Four Agenda.
In preparing this policy, the State Department for Industrialization constituted a Multi-Agency
technical team and contracted Kenya Institute of Public Policy Research and Analysis (KIPPRA) to
provide consultancy services. The team adopted a participatory approach as required by the
Constitution where views and comments by key actors and stakeholders from private and public
sector, Development Partners, MSE Leaders and Operators were sort at regional and National levels.
This involved several stakeholders’ regional forums and National breakfast meetings and validation
workshop.
KIPPRA conducted a situational analysis that entailed the MSE sector development policies in the
National, Regional and Global contexts. The consultant took stock of the sector’s internal strength,
opportunities, weaknesses and threats. Thereafter, KIPPRA prepared tools of engagement which
guided the stakeholders’ participation and contribution to the issues and proposed interventions used
in the policy review. This helped in redefining of Micro and Small Enterprises, Vision and Mission,
policy statement, guiding principles and Values, policy goal and Strategic objectives.
The policy details interventions and activities that will be implemented to deliver specific objectives
in a coordinated implementation framework. In this regard, the various policy issues will require
coordination and collaboration with other actors that have been identified in the framework. In
addition, a monitoring and Evaluation framework for effective and efficient tracking of
implementation of the MSE policy have been developed.
I wish to express my deep gratitude and appreciation to the MSE policy technical team that
participated and contributed throughout the review process, KIPPRA team that provided consultancy
and all those who participated in the preparation of the policy. I am confident that this policy serves
as the MSE sector framework for decision making, planning, resource mobilization and utilization,
monitoring and evaluation for the next five years. It is my hope that we will together turn the MSE
sector and make Kenya an industrialized, globally competitive within the period and beyond.

Thank you and God bless you.

Dr. F. O. Owino, PhD, CBS

Principal Secretary
State Department for Industrialization

iii
TABLE OF CONTENTS
Foreword ............................................................................................................................................................. i
Preface and Acknowledgments.........................................................................................................................iii
TABLE OF CONTENTS .........................................................................................................................................iv
ABBREVIATIONS AND ACRONYMS ....................................................................................................................vi
KEY POLICY DEFINITIONS ................................................................................................................................. viii
EXECUTIVE SUMMARY.......................................................................................................................................ix
1 CHAPTER 1: INTRODUCTION ..................................................................................................................... 1
1.1 Background ........................................................................................................................................ 1
1.2 Policy Review Process........................................................................................................................ 2
1.3 Rationale of the Policy....................................................................................................................... 2
1.4 Policy Goal and Objectives ................................................................................................................ 4
1.5 Vision .................................................................................................................................................. 4
1.6 Mission ............................................................................................................................................... 4
1.7 Guiding Principles and Values ........................................................................................................... 4
1.8 Scope of the Policy............................................................................................................................. 5
2 CHAPTER 2: SITUATIONAL ANALYSIS OF THE MSE SECTOR ..................................................................... 6
2.1 Structure of MSEs .............................................................................................................................. 6
2.2 Socio-Economic Contributions of MSEs ............................................................................................ 7
2.3 Policy Evolution ................................................................................................................................. 7
2.4 Challenges Facing MSEs ..................................................................................................................... 9
2.4.1 Entrepreneurial Culture ........................................................................................................ 10
2.4.2 Skills for MSEs Capacity ....................................................................................................... 10
2.4.3 Access to Markets ................................................................................................................... 10
2.4.4 Access to Affordable Finance ................................................................................................ 11
2.4.5 Infrastructure ......................................................................................................................... 11
2.4.6 Survival Rates of Start-Ups ................................................................................................... 12
2.4.7 Formalization of MSEs .......................................................................................................... 12
2.4.8 Legal and Regulatory Business Environment ..................................................................... 12
2.4.9 Co-ordination and Implementation of MSEs Policies and Programmes .......................... 12
2.4.10 External Business Risks ......................................................................................................... 13
2.5 Strengths, Weaknesses, Opportunities and Threats (SWOT)Analysis of MSEs Sector ................. 13
3 CHAPTER 3: MSE SECTOR POLICY STATEMENTS ..................................................................................... 15

iv
 3.1 Entrenching the Entrepreneurial Culture ....................................................................................... 15
3.2 Building MSEs Skills to enhance their Capacity .............................................................................. 15
3.3 Expanding Market Opportunities for MSEs .................................................................................... 15
3.4 Enhancing Access to Affordable Finance ........................................................................................ 16
3.5 Providing Accessible, Affordable and Decent Infrastructure for MSEs ......................................... 17
3.6 Promoting Start-Ups ........................................................................................................................ 17
3.7 Promoting Formalization of MSEs .................................................................................................. 18
3.8 Strengthening Coordination and Implementation of MSE Policies and Support Programmes ... 18
3.9 Providing a Conducive Legal and Regulatory Environment ........................................................... 19
3.10 Mitigating External Business Risks .................................................................................................. 19
3.11 Cross-Cutting and Emerging Issues ................................................................................................. 19
3.12 Policy Coordination and Implementation ...................................................................................... 20
3.13 The Role of Stakeholders................................................................................................................. 20
3.13.1 State Actors ............................................................................................................................. 20
3.13.2 Non-State Actors .................................................................................................................... 21
4 CHAPTER 5: MONITORING AND EVALUATION ....................................................................................... 22
ANNEX 1: IMPLEMENTATION MATRIX............................................................................................................ 24

v
ABBREVIATIONS AND ACRONYMS

ACA Anticounterfeit Authority

AfCFTA African Continental Free Trade Area
AGOA African Growth and Opportunity Act
AGPO Access to Government Procurement Opportunities
AU African Union
CoG Council of Governors
CRB Credit Reference Bureau
CUE Commission for University Education
DVS Directorate of Veterinary Services
EAC East African Community
GDP Gross Domestic Product
ICDC Industrial and Commercial Development Corporation
ICT Information and Communications Technology
IP Intellectual Property
IPR Intellectual Property Right
KEBS Kenya Bureau of Standards
KECOBO Kenya Copyright Board
KENIA Kenya National Innovation Agency
KenInvest Kenya Investment Authority
KEPHIS Kenya Plant Health Inspectorate Service
KEPROBA Kenya Export Promotion and Branding Agency
KIBT Kenya Institute of Business Training
KICD Kenya Institute of Curriculum Development
KIE Kenya Industrial Estates
KIHBS Kenya Integrated Household Budget Survey
KIPI Kenya Industrial Property Institute
KIPPRA Kenya Institute for Public Policy Research and Analysis
KIRDI Kenya Industrial Research and Development Institute
KNBS Kenya National Bureau of Statistics
KRA Kenya Revenue Authority
MDA Ministries, Departments and Agencies
vi
M&E Monitoring and Evaluation
MFA Ministry of Foreign Affairs
MOITED Ministry of Industry, Trade and Enterprise Development
MOU: Memorandum of Understanding
MSEA Micro and Small Enterprises Authority
MSEs Micro and Small Enterprises
MSMEs Micro, Small and Medium Enterprises
NACOSTI National Commission for Science, Technology and Innovation
NEMA National Environment Management Authority
NGOs Non-Governmental Organizations
NMC Numerical Machining Complex
NCPWD National Council for Persons with Disabilities
PPB Pharmacy & Poisons Board
PPRA Public Procurement Regulatory Authority
PWDs Persons with Disabilities
R&D Research and Development
RIA Regulatory Impact Assessment
SASRA SACCO Societies Regulatory Authority
SDGs Sustainable Development Goals
SDT State Department for Trade
ToT Training of Trainers
TVC Technical Vocational Centers
TVET Technical and Vocational Education and Training
TVETA Technical and Vocational Education and Training Authority

vii
KEY POLICY DEFINITIONS
Micro enterprise means a business activity whose annual turnover is below KShs. 1 million and
meets any of the following criteria;
a) Employs less than 10 people; or
b) Has total assets as shall be determined from time to time by the Cabinet Secretary
(Responsible for matters relating to MSEs).
Small enterprise means a business activity whose annual turnover ranges between Kshs. 1 million
and KShs. 5 million and meets any of the following criteria;
a) Employs between 10-50 people;
b) Has total assets as shall be determined from time to time by the Cabinet Secretary
(Responsible for matters relating to MSEs).
MSE Associations means grouping of MSEs who come together under a common objective through
a membership criterion for the common benefit of their members.

MSE Support Institutions means public or private institutions that are engaged in providing varied
support services to MSEs.

viii
EXECUTIVE SUMMARY
Significance of the MSEs Sector
The Micro and Small Enterprises (MSEs) account for a larger share of private sector enterprises
across various sectors of the economy. The sector accounts for 24% of GDP, over 90% of private
sector enterprises and 93% of total labour force in the economy. Development of this sector is
therefore central to realization of national development goals anchored in the Kenya Vision 2030 and
the Big Four Agenda. The sector is particularly important for providing job and income opportunities
for economically excluded segments of the population including youth, women, persons with
disabilities and low-skilled persons, who experience disproportionately high unemployment. The
development of the sector also offers opportunities for progress towards realization of the regional
and global policy commitments including the East African Community (EAC) Vision 2050, African
Union (AU) Agenda 2063 and the Sustainable Development Goals (SDGs) of the United Nations. At
the core of this regional and global policy commitments is the need for inclusive and sustainable
development anchored on industrialization agenda.

Policy Formulation Process

The formulation of this policy utilized extensive review of literature, relevant surveys and critical
review of past and existing policies. The reviews were guided by the aspirations and provisions
articulated in the Kenya Vision 2030, the Constitution of Kenya and other regional and global
development agenda. These reviews enriched insights on the Sector’s policy evolution, policy gaps
and the persistent constraints eroding potential of the sector. Inputs from a technical committee
drawing membership from key institutions involved in development of the sector provided in-depth
insights into opportunities and challenges relevant to the sector. Extensive consultations were held
across the counties and the national level; first to elicit their views on challenges and opportunities in
the sector, and second to validate the proposed policy interventions.

Rationale of the Policy

The rationale for formulating this policy on MSEs is three-fold. First, despite past and existing policy
interventions, there are some persistent challenges and emerging issues impeding development of the
sector. These challenges include those related to skills, access to affordable finance, access to
markets, obsolete technology, policy lacuna focusing on the ecosystems for start-ups, regulatory
environment and institutional coordination. Second, there is need to accommodate emerging issues
and developments in the country. The Kenya Vision 2030 developed in 2008 emphasizes
industrialization and equitable development as policy priorities. Additionally, the devolved
governance structure under the Constitution of Kenya presents development opportunities in terms
of decentralization of public services and roles of the county governments in development of
infrastructure, enterprises and trade. There are also new sector-level national policies that provide
opportunities for development of MSEs. These include the National Industrialization Policy 2012,
the National Trade Policy 2017, the Kenya Investment Policy 2019 and the Kenya Youth
Development Policy 2019. Given that activities of MSEs cut across all sectors of the economy, it is
imperative to develop a new MSEs policy to reflect current situation and create policy implementation
synergies across the sectors. Third, there is need to mainstream emerging issues and developments
at the regional and global levels. The East African Community (EAC) Vision 2050 recognizes role
of MSEs in regional industrial development agenda, underscoring the need for enhanced

ix
competitiveness through innovation and value addition to tap into intra-regional and inter-regional
trade opportunities. The AU Agenda 2063 aims to transform and grow the industrial base of the
African Continent through value addition of natural resources and sectoral productivity growth,
focusing on MSEs and agri-business. At global level, the SDGs recognize broader socio-economic
significance of MSEs and prioritizes development of the sector through enhanced innovation and
competitiveness.

Goals and Objectives of the Policy

The policy’s goal is to provide an integrated enabling business environment for the growth and
development of productive MSEs in Kenya that make significant socio-economic contributions to the
economy through provision of decent jobs and source of quality products. The objectives of the policy
are anchored on ten (10) challenges that emerged from critical review of literature and past policies,
as well as extensive stakeholder consultations across the country targeting MSEs, policy
implementing institutions, development partners and private sector representatives. The ten (10)
objectives include: - (i) Entrenchment of entrepreneur culture; (ii) Skills and capacity development;
(iii) Access to domestic and export markets (iv) Access to a diversified and affordable range of
financial products and services; (v) Access to decent and affordable infrastructure; (vi) Facilitation
of start-ups; (vii) Promotion of formalization; (viii) Enhanced coordination and implementation of
support programmes targeting development of the sector; (ix) Conducive regulatory environment at
the national and county levels; and (x) Mitigation of business external risks including those that are
emerging and cross-cutting in nature. The policy interventions are aligned to these objectives, seek
to enhance competitiveness, productivity and sustainability of MSEs in supporting the economy
through provision of quality goods and services, decent jobs, incomes and wealth creation.

Guiding Principles and Values of the Policy

The implementation of these policy is guided by twelve (12) guiding principles and values drawn
from the National Values and Principle of Governance enshrined in the Constitution of Kenya and
aspirations of sustainable development. The guiding principles and values reflect on the critical
challenges facing the sector and are therefore embedded in formulation of the policy statements and
activities to realize the policy statements. These include (i) Patriotism in promoting use and
consumption of locally produced goods and services; (ii) Human dignity in ensuring business
environment and practices take into account individuals’ social and economic rights; (iii)
Inclusiveness in ensuring participation and sharing of gains for all, including youth, women and
persons with disabilities; (iv) Equality in access to opportunities and services; (v) Good governance
to ensure accountability and transparency both on the part of MSEs and MSEs support institutions;
(vi) Sustainable development, focusing on responsible business practices; (vii) ‘Start-small grow-big’
to ensure micro enterprises gradually grow into small and large enterprises; (viii) Economic
diversification to tap into local, regional and international markets; (ix) Productivity and
competitiveness through enabling environment (Infrastructure, legal and regulatory framework),
skills, innovation and technology; (x) Integrated development approach through coordination
synergies across actors, sectors and interventions; (xi) Regional and global integration through
mainstreaming of policy developments and value chain integration to tap into the markets; and (xii)
Effective communication to ensure MSEs’ adequate involvement in policy formulation process, as
well as communication on opportunities, services and markets.

x
Policy Statements
Strengthening entrepreneurship culture: In entrenching the entrepreneurship culture the
government will develop an integrated approach to profile the success stories and benefits of
entrepreneurship, inculcate entrepreneurship skills at all levels of education system, rebrand the
MSEs sector to appeal to all, establish and maintain entrepreneurship award system and mainstream
the issues of special interest groups in the entrepreneurship agenda.
Building MSEs skills to enhance their capacity: Recognizing the significance of skills and capacity
of MSEs in productivity growth, policy interventions will seek to provide holistic demand-driven and
well-structured capacity building programmes, promote skills and technology transfer, promote
linkages between learning and research institutions for technology development and transfer to MSEs,
create awareness initiatives on skills certification and mainstream the needs of persons with
disabilities in skills development.
Expanding market opportunities for MSEs. The policy interventions will target domestic and
export markets by addressing issues related to access to information, compliance with standards,
product standardization, certification, value addition, local content opportunities, sub-contracting
linkages and adoption of technology. The policy measures will also seek to create awareness on
standards requirements, ensure compliance and strict enforcement of standards, promote
standardization of MSEs products, create accessible digital portals for MSEs to access market
information, establish sub-contracting framework, create awareness and streamline government
procurement opportunities and establish creating marketing approaches, among other interventions.
Access to affordable finance: The policy measures consider availability/access and affordability of
range of financial products and services including credit, savings, insurance, investments and
payments in providing seed capital, working capital, investments in productive assets (capital
investments) and risk mitigations. Key policy interventions will include strengthening self-sustaining
funds for MSEs, financial literacy initiatives for awareness campaigns, promotion of non-traditional
forms of collateral, frameworks for micro-leasing and partnerships in developing alternative sources
of financing.
Providing accessible, affordable and decent infrastructure for MSEs: The critical infrastructure
requirements for MSEs include road networks, energy, ICT, water and sanitation, waste management
facilities, worksites, workspaces, common user facilities, storage facilities, incubation centers, one-
stop shops and centers of excellences. Key policy interventions will include identification, mapping,
zoning and securing all land designated for MSEs; integration of MSEs zones in national and county
spatial plans; development of new and revamping of infrastructure; establishment of integrated
biashara centers across the country; promotion of local manufacture of affordable tools and
machinery for MSEs and enhanced collaborations in developing infrastructure. Other initiatives
include mainstreaming the needs of persons with disabilities in infrastructure services.

Promoting start-ups: To facilitate new businesses with unique ideas, the policy measures will
include: Establishment of an integrated framework for awareness, identification, and profiling start-
ups across all counties; establishment of new and strengthening existing incubation centers;
enhancing capacity for start-ups in acquisition of intellectual property rights, establishment of a
xi
structured approach for technology transfer and commercialization of innovations; and more
engagement of private sector through partnerships and incentives.

Promoting formalization of MSEs: Majority of MSEs operate informally, constraining access to

finance and markets among other opportunities. Policy measures towards formalization will include:
Creation of awareness on registration procedures and benefits of registration; harmonization and
streamlining of licensing and registration procedures; promotion of creative approaches for licensing
and registration; and promotion of incentives towards formalization.
Strengthening coordination and implementation of support programmes: This intervention
focuses on enhanced implementation of policies through synergies among state and non-state actors
involved in the sector, monitoring and evaluation of support activities. The policy interventions will
include development of a framework for coordination, implementation, and monitoring and
evaluation of all MSEs policies, programmes, activities and development plans; creation of awareness
on the importance of effective associations for MSEs and encourage their formation; and enhancing
the capacity of MSEs support institutions.
Providing a conducive legal and regulatory environment: This intervention targets business
environment in promoting reduced costs of doing business. The interventions will include
establishment of an integrated and structured awareness creation approach on laws and regulations
relevant to MSEs; establishment of a framework to improve the ease and cost of doing business for
MSEs; and fiscal and other forms of incentives targeted at growth and development of MSEs.

Mitigating external business risks: MSEs face higher external business risks due to their nature of
operations which poses a threat to their development. The aim of these interventions under this
thematic area is to mitigate risks. The interventions geared towards addressing external business risks
in the MSEs sector include development of effective risk mitigations, adaptations and coping
mechanisms against hazards posing shocks to MSEs; and promotion of policy certainty for MSEs
development.

Cross-cutting and emerging issues: These issues apply to a range of aspects relevant to MSEs, some
of which are emerging at national, regional or global level. The focus is to mitigate risks, harness the
gains and exploit the opportunities from these issues for sustainable growth of the MSEs. The policy
measures will include effective and efficient governance structures to support MSEs; effective risk
mitigations, adaptations and coping mechanisms against hazards posing shocks to MSEs;
environmentally friendly business practices in MSEs activities; inclusivity of PWDs and other special
interest groups; exploitation of existing and emerging opportunities; use of technology within MSEs
program and initiatives; framework for knowledge management within the MSEs sector (including
indigenous knowledge); policy certainty for MSEs development.

xii
 1 CHAPTER 1: INTRODUCTION
1.1 Background
The Micro and Small Enterprises (MSEs) provide enormous opportunities for socio-economic
transformation of Kenya’s economy. While the sector has received policy attention since 1965, it is
yet to fully achieve its full potential. The Kenya Vision 2030, which identifies the sector as a seedbed
of industrialization, aims to transform the economy into an industrialized upper middle-income status
by the year 2030, offering a high quality of life to all the citizens. Currently, the country is classified
as a lower middle-income economy. The economic pillar of the Vision 2030 aims to achieve 10%
annual Gross Domestic Product (GDP) growth rates. The Kenyan economy enjoyed a robust GDP
growth rates averaging 6% annually between 2010 and 2018. This growth rate was supported by
macroeconomic stability, increased private consumption and agricultural production, accompanied
by improvements in financial inclusion, business environment and investments in public
infrastructure. With a real GDP of KShs. 4.8 trillion in 2018, Kenya is the largest economy in the
East African Community (EAC) region.
The MSEs sector is a key cornerstone for realization of the Vision 2030 development aspirations
since it accounts for significant proportions of the priority sectors under the economic pillar of the
Vision 2030. These sectors include trade, manufacturing, agriculture and livestock, tourism and
financial services. The MSEs are also involved in activities related to emerging sectors prioritized in
the economic pillar of the Vision 2030 that include blue economy and extractive resources. Further,
MSEs account for over 90% of the private sector enterprises, providing opportunities for realising
inclusive development particularly under the devolved governance structure. A key objective of
devolution is to promote equitable social economic development. The level of development is
however concentrated in few urban counties. For instance, the Gross County Product 2019 shows 10
counties account for 54% of the national GDP. Nairobi alone accounted for 22% of national GDP.
The MSEs sector also provides opportunities for absorbing low-skill and economically excluded
segment of the labour force including youth, women, persons with disabilities and those with low
levels of education. The2019 Kenya Population and Housing Census reveals persons below 35 years
of age account for 76% of the population, an indication of a rising demand for job opportunities. The
Census further reveals that youth in the age bracket of 15 to 34 years represents 36% of the population.
On labour force 2.6 million of the economically active population is seeking work, of which females
represent 44% and youth 68%. The youth are therefore disproportionately affected by unemployment.
Additionally, 2% of the population live with disabilities of various forms including visual, hearing,
communication, cognition, mobility and selfcare. Among the Persons with Disabilities (PWDs), 55%
reported facing difficulties in engaging in economic activities.
A large proportion of the labour force derive their livelihood from the MSE sector. The sector
therefore provides income for the poor and presents an avenue for reducing poverty. Poverty
reduction has been a key policy priority in Kenya. The 2015/2016 KIHBS shows that while overall
headcount poverty decreased from 47% in 2005/2006 to 36% in 2015/2016; the incidence is still high
in rural areas at 40%.
The MSEs therefore provide immense potential for providing employment opportunities and
inclusive development as envisioned in the Kenya Vision 2030.In recognition of the sector’s
potential, the government and other stakeholders have over the years introduced policy measures

1
designed for the growth and development of MSEs sector. This policy builds on the gains of the
previous policy initiatives while seeking to address the weaknesses, policy gaps, persistent and
emerging challenges facing the sector.
Unlocking the potential of the MSEs sector through renewed policy interventions can provide the
sector with capacity to create sustainable decent jobs and wealth creation especially among the
economically excluded segments of the population including youth, women and persons with
disabilities. The youth in particular accounts for 68% of the persons seeking for employment in Kenya
and tapping into their innovativeness and technology savviness through a vibrant MSEs sector can
yield demographic dividends for wealth creation.
1.2 Policy Review Process
The formulation of this policy was guided by an extensive review of literature, relevant surveys and
critical review of the past and existing policies. This exercise enriched insights on the sector’s policy
evolution and the persistent challenges in policy implementation. The reviews were guided by the
aspirations and provisions articulated in the Kenya Vision 2030, the Constitution of Kenya and other
regional and global development agenda.
Further, key input was provided through a consultative and participatory approach involving a
technical committee with representations from various Ministries, Departments and Agencies
(MDAs) including; State Department for Industrialization, State Department for Trade (SDT), Micro
and Small Enterprises Authority (MSEA), Kenya Industrial Property Institute (KIPI), Kenya
Industrial Research and Development Institute (KIRDI), Kenya Industrial Estates (KIE), Kenya
Investment Authority (KenInvest), Numerical Machining Complex (NMC), Kenya Bureau of
Standards (KEBS) and Kenya Institute for Business Training (KIBT). The county governments were
represented through the office of the Council of Governors (CoG). The Kenya Institute for Public
Policy Research and Analysis (KIPPRA) played the lead role in guidance and development of the
policy.

Through eleven (11) regional fora, views were elicited on existing challenges and opportunities facing
the sector, with stakeholders covering all the 47 counties. The participants in the eleven (11) regional
fora were drawn from the National Government, County Governments, MSEs, MSE Associations,
Non-Governmental Organizations (NGOs), Development Partners and other players in the private
sector. Further, two national consultative forums were held with Chief Executive Officers (CEOs)
from state corporations, County Executive Committees (CECs) of Trade and Industrialization from
across the country and CEOs from the private sector institutions. Finally, a national validation
workshop was held with representatives from the government and non-government actors drawn from
across the country.

1.3 Rationale of the Policy

Development of the private sector is key to industrial and economic development. While MSEs sector
accounts for 24% of GDP and makes significant contributions to employment, addressing the
challenges impeding its development and designing interventions to tap into emerging opportunities
will immensely enhance its socio-economic contributions. The Government has since independence
introduced policies to promote growth and development of the sector. The existing policy, Sessional
Paper No. 2 of 2005 on Development of Micro and Small Enterprises for Wealth and Employment

2
Creation for Poverty Reduction, was developed fifteen years ago. There is need to develop a new
MSEs policy for the following three reasons.
First, despite past and existing policy interventions, there are some persistent challenges and emerging
issues impeding development of the sector. These challenges include those related to skills, access to
affordable finance, access to markets, obsolete technology, policy lacuna focusing on the ecosystems
for start-ups, regulatory environment and institutional coordination. The 2016 MSMEs Survey and
the 2019 FinAccess Survey shows MSEs have limited access to a narrow range of affordable finance
for seed capital, working capital and investments in productive assets. Ease of access, affordability
and terms of financing remain key obstacles to MSEs. Constraints on access to domestic and export
markets relate to disadvantages of MSEs regarding costs of production, quality of products, access to
information on markets and unfair competition emanating from illicit trade in the domestic market.
Use of outdated technology for production of goods and services erodes efficiency and cost
competitiveness. Start-up businesses, while expected to serve as the seedbed for industrialization face
disproportionate challenges owing to uncertainties on viability of the innovative ideas and lack of
historical information on performance of the business. The regulatory environment poses compliance
costs for MSEs due to multiple institutions and licensing requirements. Despite the provisions in the
MSEs Act of 2012, the efforts of support institutions involved in promotion and development of
MSEs largely remain uncoordinated, thus weakening synergies that would accelerate development of
the sector.
Second, there is need to accommodate emerging issues and developments in the country. The Kenya
Vision 2030 developed in 2008 emphasizes industrialization and equitable development as policy
priorities. The devolved governance structure under the Constitution of Kenya presents development
opportunities in terms of decentralisation of public services and roles of the county governments in
enterprise and trade development. There are also new sector-level national policies that provide
opportunities for development of MSEs. For instance, the Kenya Investment Policy 2019 seeks to
enhance value addition, competitiveness and integration of MSEs into the global value chain; and the
National Trade Policy 2017 that seeks to renew development of the MSEs through supportive
regulatory framework, preferential access to markets, supportive financing and innovation ecosystem.
The Kenya Youth Development Policy 2019 seeks to promote self-employment through inculcation
of entrepreneurship culture. Given that MSEs account for majority of the enterprises across various
sectors of the economy, there is need to align the interventions of the MSEs policy to these national
and sectoral policies to create synergies in policy implementation across sectors.
Third, there are emerging development issues at the regional and global levels which need to be
mainstreamed in the MSEs policy. The East African Community (EAC) Vision 2050 recognises the
role of MSEs in regional industrial development agenda and prioritizes enhancing competitiveness
through innovation and value addition to tap into intra-regional and inter-regional trade opportunities.
The AU Agenda 2063 focuses on MSEs as key in transformation and growth of the industrial base of
the African Continent through value addition of natural resources and sectoral productivity growth.
At global level, the Sustainable Development Goals (SDGs) recognise broader socio-economic
significance of MSEs and sets an important agenda for development of the sector. In particular, SDG
8 envisages decent job creation, development of entrepreneurship, innovation and formalisation of
MSEs while SDG 9 seeks to promote development of MSEs through access to a range of formal
financial services and their integration into value chains and markets. Additionally, SDG 17 calls for

3
 partnerships in implementing development policies. The MSEs policy can benefit from the envisaged
partnerships particularly with regards to financing, access to environmentally sound technology and
generation of rich data to guide policy interventions. This MSEs policy is cognisant of these regional
and global developments and envisions to mainstream the policy priorities anchored therein to
position Kenya in the global market.
1.4 Policy Goal and Objectives
This policy aims to provide an integrated enabling business environment for the growth and
development of productive MSEs in Kenya that make significant socio-economic contributions to the
economy through provision of decent jobs and source of quality products. Specifically, the objectives
of this policy are to: -
i. Entrench entrepreneurial culture for development of MSEs.
ii. Build skills for capacity development for MSEs.
iii. Increase the share of MSEs access to the domestic and export markets.
iv. Facilitate access to a diversified and affordable range of financial products and services by
MSEs.
v. Increase access to decent and affordable infrastructure services for MSEs.
vi. Facilitate start-ups.
vii. Promote formalisation of MSEs.
viii. Enhance coordination and implementation of MSEs policies and support programmes.
ix. Provide a conducive regulatory environment at the national and county levels for the
development of MSEs.
x. Address business external risks facing MSEs.
xi. Tackle cross-cutting and emerging issues affecting MSEs.
1.5 Vision
A technologically advanced, highly productive, diversified and competitive MSEs sector for a
globally competitive economy.
1.6 Mission
To create an integrated enabling environment for a highly productive and diversified MSEs sector for
wealth and employment creation.
1.7 Guiding Principles and Values
This policy is guided by the National Values and Principle of Governance enshrined in the
Constitution of Kenya and aspirations of sustainable development. The following principles and
values underpin the formulation and implementation of this MSEs policy.
i. Patriotism. This policy promotes use and consumption of locally produced goods and services.
ii. Human dignity. The business environment and practices will be cognisant of individuals’ social
and economic rights.
iii. Inclusiveness. The policy encourages participation of all members of the society including youth,
women and persons with disabilities.
iv. Equality. There is equal access to opportunities and government services.

4
 v. Good governance. The development of the sector recognises transparency and accountability in
MSEs and support institutions.
vi. Sustainable development. The policy encourages responsible business practices.
vii. Start small, grow big. The policy interventions will seek to promote the growth of micro enterprises
to small, small to medium and medium to large enterprises.
viii. Economic diversification. The policy interventions promote engagement in diversified economic
activities to exploit domestic, regional and international markets.
ix. Productivity and competitiveness. The policy interventions provide an enabling environment and
support development of appropriate skills, innovation and technology to increase productivity and
competitiveness of MSEs.
x. Integrated development approach. This policy purposefully links and incorporates relevant MSEs
support institutions and creates synergies at national and county level in the design, implementation
and evaluation of policy interventions.
xi. Regional and global integration. The policy promotes strategies that embrace value chain
integration and synergies with relevant regional and global developments, treaties, agreements and
obligations.
xii. Effective communication. The policy provides for MSEs adequate involved in policy formulation
processes, and opportunities and services available to them are communicated using effective
channels.
1.8 Scope of the Policy
This policy applies to the National and County Governments, MSEs and supporting institutions which
include state organs, the private sector, development partners and other non-state actors.

5
 2 CHAPTER 2: SITUATIONAL ANALYSIS OF THE MSE SECTOR

2.1 Structure of MSEs1

There are 7.4 million MSEs operating in Kenya. About 98% of the MSEs are micro enterprises that
employ less than 10 persons. The medium enterprises account for only 0.2% of MSMEs in the
economy. The low share of medium enterprises, commonly referred to as the ‘missing middle’,
suggests constraints that limit growth of MSEs consequently denying the economy decent jobs and
wealth creation. As such there is a need to address the constraints facing MSEs that limit their growth
and hence their graduation to medium enterprises. There are opportunities for diversification of the
sector in line with the Kenya Vision 2030, regional and global development policies that seek to
promote development agenda through value addition. Three sectors including wholesale and retail
trade, manufacturing, and food and accommodation services jointly account for 76% of the MSEs in
Kenya. At individual sectoral level, the wholesale and retail trade sector accounts for 57% of MSEs
while manufacturing and food & accommodation services accounts for 11% and 9% of MSEs,
respectively.
Formalization, involving the process of obtaining licenses, registering with registrar of companies
and compliance with statutory requirements such as taxation, social security and labour laws, serves
as an important avenue for MSEs to access markets and services. About 21% of MSEs operate with
licenses from county governments, out of which only 27% are registered with the registrar of
companies. Micro enterprises registered with registrar of companies are only 4% compared to 67%
of small enterprises.
Gender mainstreaming in development as articulated in the Constitution of Kenya and the Kenya
Vision 2030 is an important consideration for promotion and development of MSEs. The MSEs Act
No. 55 of 2012 underscores gender mainstreaming in all MSEs programmes and activities. The
ownership of MSEs is male dominated either through individual or joint ownership. Males have
ownership in 71% of the 7.4 million MSEs, individually or jointly. On the other hand, females have
ownership in 53% of the total MSEs, individually or jointly. Female participation in MSEs ownership
is relatively higher in micro enterprises compared to small enterprises. Further, female owned
enterprises are largely informal and therefore face disproportionately higher constraints in access to
opportunities such as finance and markets.
Business start-ups serves as the seedbed for private sector development, employment growth and
sources of new products. The sector faces high mortality as 2.2 million MSEs closed within five
years, mainly in the wholesale and retail trade sector (74%). As a result, about 3.1 million jobs were
lost. Among the owners who closed businesses; 34% indicated they were not engaged in any other
business; 29% started working for someone else; and 23% started other business. The failure of MSEs
to grow and graduate into medium enterprises creates the policy challenge of ‘missing middle.’ The
fact that majority of the closures happen within the first year shows the need for policy interventions
in the early years of operations.

1 The statistics in this Section are based on the 2016 MSMEs Survey (KNBS)
6
2.2 Socio-Economic Contributions of MSEs
MSEs play significant roles in the economy in terms of contributions to GDP, employment,
investments and meeting various households needs. The MSEs in Kenya account for 24% of GDP.
The micro enterprises alone account for 12% of GDP while small enterprises account for 11% of
GDP. The contributions of MSEs in Kenya is however lower than that of South Africa (55%),
Hungary (54%) and Malaysia (37%), suggesting opportunities for improvements with appropriate
policy interventions.
Majority of the employed persons in Kenya work in the MSEs sector. The MSEs employ 14.1 million
persons, accounting for 93% of the total labor force in the economy. The sector provides immense
employment opportunities for youth, women and persons with disabilities. The 2016 MSMEs Survey
shows that youth (18-35 years) and female accounted for 36% and 47%, respectively, of the persons
employed by MSEs in Kenya. Further, according to the 2009 Population and Housing Census, 45%
and 28% of female and male persons with disabilities, respectively, are employed in the MSEs sector
mainly through the informal sector and small-scale agriculture. The mainstreaming of youth, gender
and PWDs is therefore imperative, given the potential of the sector in supporting these interest groups.
The incomes generated by MSEs are used for investments and supporting vital household needs
essential for socio-economic development. The 2016 MSMEs Survey shows that the main uses of
MSEs earnings include expenditure on household needs (including food, health and education),
business reinvestments, investments in new businesses and savings.
2.3 Policy Evolution
The policies in Kenya targeted at development of the MSEs can be traced from the Sessional Paper
No. 10 of 1965 on African Socialism and its Application to Planning in Kenya that emphasised on
African ownership and management of enterprises, skills and cooperative development. The policy
further emphasised access to finance primarily through institutions such as Industrial and Commercial
Development Corporation (ICDC) and market access through establishment of industrial estates and
measures to address unfair trade practices. The interventions of this policy were intended to overcome
socio-economic weaknesses of the colonial administration that for instance limited African
involvement in entrepreneurship.
While the Sessional Paper No 10was successful in entrenching development of cooperatives in
Kenya, the focus on markets was largely inward oriented and thus, there was little interventions to
enhance competitiveness in a liberalised market that would occur in later years. The policy also
sought to direct public investments to areas considered high potential, characterised by fertile soils
and abundant rainfall, and this created marginalisation of Arid and Semi-Arid Lands (ASALs).
Private investments consequently remained depressed in these regions. During this policy regime,
heavy focus was also put on the role of public sector. There were therefore limited incentives to
accelerate private sector-led development.
The Sessional Paper No. 1 of 1986 on Economic Management for Renewed Growth explicitly
recognised the role of MSEs then termed ‘informal sector and small-scale industries’ in economic
development. The explicit recognition of the sector was motivated by a comprehensive study
undertaken by the International Labour Organisation (ILO), which showed that informal sector and
small-scale industries had immense potential for socio-economic transformation of the economy
through employment and income generation. Priority intervention areas included infrastructure
7
development; access to finance; innovation and technology; skills development and extension
services; and incentives for investments in machinery. Enhancing access to finance and strengthening
training and skills development were again emphasised owing to limited achievements realised.
Sessional Paper No 2 of 1986 did not however provide a more comprehensive policy framework
targeting the sector.
The Sessional Paper No. 2 of 1992 on Small Enterprises and Jua Kali Development in Kenya, which
was informed by the report of a Special Taskforce established in March 1987 to review all policies
for promoting small-scale enterprises in the country, provided a more comprehensive policy
framework targeting the sector. The policy prioritised improved business environment for MSEs;
access to finance through rural enterprise funds, venture capital development, credit guarantee
schemes; innovation and adoption and utilization of technology; worksites and improved
infrastructural facilities; access to markets by encouraging local consumption and the promotion
exports; enhance skills and institutional support and enhanced coordination. The 1992 Sessional
Paper clearly defined MSEs as enterprises employing 1-50 persons, thus providing a clear scope for
the policy interventions. This policy also recognised the importance of providing fiscal incentives to
the private sector to participate in development of the sector. For instance, it envisaged investments
allowance for small-scale enterprises engaged in manufacturing outside Nairobi, and exemptions
from import duties for investments in machinery by MSEs.
The implementation of the 1992 Sessional Paper was however weakened by lack of a legal framework
to facilitate coordination of activities in the sector. Then, the Directorate of Applied Technology and
the Division of Small Scale and Jua Kali Enterprises coordinated activities in the sector. This perhaps
contributed to coordination challenges leading to their merger in the year 2000 to form the
Department of Micro and Small Enterprises Development housed within the Ministry of Labour. The
newly formed Department however continued to face challenges related to weak autonomy in
resource allocation and decision-making.
The Sessional Paper No. 2 of 2005 on Development of Micro and Small Enterprises for Wealth and
Employment Creation for Poverty Reduction builds on proposed interventions of the 1992 Sessional
Paper. The policy prioritised MSEs access to markets, including public procurement reservations. It
further provided for institutional support; technology development, acquisition and transfer,
infrastructural development, information documentation and management, linkages between MSEs
with medium and large firms; and access to finance through promotion of Micro Finance Institutions,
SACCOs, and use of micro leasing thereby calling for enactment of relevant legal framework. The
policy advocated for a regulatory framework that culminated into the enactment of the MSEs Act No.
55 of 2012.
The enactment of the MSEs Act 2012, established the MSEA with the mandate of promoting,
developing and regulating the MSEs sector. This envisaged policy interventions were however
weakened due to delayed operationalization of some provisions articulated in the MSEs Act,
including the office of Registrar of MSEs, the MSEs Tribunal and the MSEs Development Fund. The
MSEs fund is intended to finance promotion and development of MSEs including access to finance,
capacity building, Research & Development (R&D), innovation and transfer of technology. Due to
delayed operationalization of the MSEs Development Fund, most of these activities have remained
unachieved.

8
Despite the fact the 2005 MSE Sessional paper has been operational for 15 years, there are some
interventions that remain unimplemented including a framework to promote business linkages
between MSEs and large firms, micro leasing and database on MSE programmes.Other proposed
interventions have been implemented inconsistently, such as the marketing of MSE products on
certain streets on specific days. For such a policy to be effectively actualized, a market framework
with clear guidelines needed to be established. The implementation challenges were further
compounded by weak M&E system. Lastly, the 2005 Sessional Paper overlooked the role of
innovation, incubation services as well as the contribution of youth in enterprise development and
therefore excludes these important constituents.
Within the last two decades there also has beennational policies that support the development of
MSEs including the Economic Recovery Strategy for Wealth and Employment Creation (ERS) 2003
-2007 and the Kenya Vision 2030. The ERS 2003 - 2007prioritised reduced regulatory compliance
costs; formalisation; access to worksites and quality infrastructure; access to domestic and export
markets; and linkages with medium and large enterprises. TheKenya Vision 2030aims at transforming
Kenya to a newly industrializing middle-income economy and underscores the importance of
providing infrastructural support to small enterprises, identified as seedbeds of the country’s
industrial development, through industrial parks, special economic zones and introduction of centers
of excellence.
Since the 2005 Sessional Paper, there has been other sector-level policies with aspects relevant to
development of MSEs. The Sessional Paper No. 9 of 2012 on the National Industrialization Policy
Framework for Kenya 2012-2030 builds on the aspirations of the industrialisation agenda of the
Kenya Vision 2030. It calls for measures to support MSEs in the industrial sector through incubation
centres, one-stop shop for enhanced services, sub-contracting linkages, establishment of industrial
parks, access to public procurement, access to market information and establishment of industrial
development fund.Both the Kenya Investment Policy 2019 and the National Trade Policy 2017
identify the need to support the MSEs through access to infrastructure and worksites, market access,
access to affordable credit, skills development and information capital. The Kenya Youth
Development Policy and the Digital Economy Blueprint 2019 recognize the complementary roles
played by youth and ICT in development of MSEs. The Cooperative Development Policy 2019aims
to strengthen and modernise cooperatives through ICT, enhanced governance structure, improved
value addition of agro-based cooperatives, capacity building and research. It also aims to promote
participation of youth and women in cooperatives. These measures can support development of MSEs
through access to finance, market opportunities and enhanced participation of youth and women in
agro-based MSEs.
2.4 Challenges Facing MSEs
MSEs in Kenya face several challenges that limit their growth and development. Market access,
infrastructure, legal and regulatory and finance constraints were reported as the top constraints
experienced by 70% of micro enterprises and 62% of small enterprises, hence should be prioritized
in this policy2. Other challenges faced by MSEs include weak entrepreneurial culture, human

2 Informed by the 2016 MSMEs Survey (KNBS)

9
resource and capacity constraints, low survival rates of start-ups, low levels of formalization, weak
co-ordination and implementation and significant external business risks.
2.4.1 Entrepreneurial Culture
Entrepreneurial culture entails values, beliefs, mindsets and behavior that promote or constrain
individuals or communities in starting and operating businesses successfully. The entrepreneurial
culture influences development of MSEs through gender roles, religious and cultural beliefs, family
and community expectations and perceptions, and way of doing business. Due to weak
entrepreneurial oriented learning within the education system in the country, there has been a negative
attitude towards venturing into entrepreneurial activities. Self-employment is often considered a
reserve for less educated and for those who fail to secure white collar jobs. The MSEs are associated
with low returns, thus remain unattractive especially to the youth who often seek quick returns.
Additionally, influenced by negative cultural beliefs in some communities, the entrepreneurial
development of PWDs has been derailed. Some communities believe that PWDs are cursed or bring
bad omen, hence they do not want to be associated with them. Further, the PWDs have self-limiting
beliefs on their ability to successfully engage in entrepreneurship.

2.4.2 Skills for MSEs Capacity

MSEs in Kenya are characterized by low managerial, financial, technical, technological and industry
relevant skills. Despite the presence of numerous learning institutions and centers of vocational
training, there is a weak link between the curricula and the practical skill set required in the industry.
Even for the courses which supposedly offer practical skills to meet the current dynamics, they lack
a practical orientation intended to equip learners with relevant skills. Moreover, the available
curricula in learning institutions and other capacity building programs have not been fully designed
to accommodate PWDs. Further, there is lack of a framework to effectively recognize and
certify industry-relevant skills gained by artisans through practical experiences. Also, the uptake of
innovation among the MSEs is low. Further, from the 2016 MSME Survey, about 0.7% of
microenterprises and 0.2% of small enterprises invest in innovation related activities. Limited skills
contribute to weak MSEs human and institutional capacity to undertake innovation required to boost
productivity.
2.4.3 Access to Markets
Majority of micro (33%) and small (27%) enterprises in Kenya reported market access challenges as
the most serious constraint to their growth and development. The main consumer of MSEs goods and
services in Kenya are individual local consumers with a negligible proportion participating in export
markets. There is also negative perception towards goods and services produced by MSEs as being
of low quality, thus constraining the demand.
Local markets are also a challenge as evidenced by the limited business linkages and low levels of
collaborations between MSEs and medium and large firms and amongst MSEs. Further, there is low
participation of MSEs in the Access to Government Procurement Opportunities (AGPO). According
to the 2016 MSME Survey, 0.3% of micro enterprises and 2.8% of small enterprises sell their products
and services to the government. While a key motivation of AGPO is to enhance market access to
special interest groups particularly youth, women and PWD, the initiative faces challenges in
accessing the targeted group.

10
The MSEs face significant competition to access local markets, largely emanating from illicit trade,
including counterfeits. Further, there is low uptake of intellectual property protection amongst MSEs
such as trademarks. Other factors include limited access to market and export information, low
compliance with standards, certification and export market requirements, and high costs of doing
business contributing to low competitiveness.
2.4.4 Access to Affordable Finance
The problem of low access to affordable finances remains a persistent challenge for MSEs in Kenya.
Financing of MSEs is heavily depend on loans from traditional sources including commercial banks,
SACCOs, microfinance institutions and informal sources such as chamas, family and friends. Even
so, unstructured business operations, high levels of informality, limited information and weak
collateral base pose key constraints that contribute to MSEs’ exclusion in access to credit. Notably,
credit exclusion is more pronounced among the youth, women and PWDs entrepreneurs, who mostly
lack tangible securities. From the 2019 Household FinAccess Survey, only15% of female
entrepreneurs made applications to financial institutions for operating capital compared to 28% of the
male entrepreneurs. These challenges are compounded by the fact that financial products and services
are often not well designed or flexible enough to meet the needs and requirements of MSEs, rendering
them ineffective and costly. According to the 2016 MSMEs survey, only 29% of the licensed MSEs
reported to have applied for loans while majority of the unlicensed, about 85% reported not to have
applied loans within three years. There has been high incidences of MSEs default on loans which
leads to negative listing with Credit Reference Bureaus (CRBs) rendering them ineligible for future
loans. Further, financial illiteracy contributes to poor financial management and low demand for
financial services.
Owing to the critical role of access to financial services in development of the sector, the government
has established institutions for providing financial support to MSEs. However, despite the initiatives,
the problem of low access to affordable finance continue to persist and has been classified in two
broad ways. First, majority of MSEs lack the awareness on the availability of the funds. They cite
low awareness on the availability and the processes for accessing public funds such as group
guaranteeing, long turnaround time, unfavourable loan limits and strict requirements which inhibit
access to the funds. Secondly, the funds have been found to be unsustainable with the responsible
institutions reporting high levels of non-performing loans. This is because the MSEs are not fully
sensitized on effects of loan defaulting to the revolving fund.
Overall diversity, accessibility and affordability of financing options for MSEs remain important policy issues.
Beyond credit there are other important financial products and services vital for development of MSEs. These
include insurance, leasing and capital market instruments. While there are supply side constraints to deepening
use of various financial products that include design of products suitable for MSEs, costs and availability, low
levels of financial literacy, religious and cultural preferences remain significant demand side constraints.
2.4.5 Infrastructure
The challenges in infrastructure in terms of access, affordability and decency, rank second for micro
(17%) and small enterprises (15%). These challenges relate to worksites, workspaces, incubation and
storage facilities, ICT facilities, centers of excellence, common user facilities, road networks,
sanitation and waste management, and utilities including electricity and water.Most of the MSEs
operate in undesignated areas, therefore operate in fear and uncertainty of demolitions by county or

11
national government authorities. The challenges are compounded by insecurity in/around the
worksites. Often, the indecent infrastructure contributes to the insecurity. Moreover, the poor
infrastructure poses challenges to PWDs depending on the extent of disability.
2.4.6 Survival Rates of Start-Ups
The 2016 MSMEs Survey reveals that there is high mortality amongst MSEs start-ups. About 2.2
million MSEs closed within five years with 46% having not made it past the first year of operation.
Majority of these closures were in the trade, accommodation and food services, and manufacturing
sectors. Among the owners who closed businesses; 34% indicated they were not engaged in any other
business; 29% started working for someone else; and 23% started other businesses. The main reasons
for closures include finance constraints (30%); personal reasons (23%); market access constraints
(20%) and shortage of stock or raw materials (6%).
2.4.7 Formalization of MSEs
The low levels of MSEs formalization serves as a constraint in markets access. Further, informal
firms expect formalization to ease difficulties they face regarding access to finance, electricity, water
and other public services; and lower corruption and harassment from public officials. Formalization
process includes obtaining licenses, registering with registrar of companies and compliance with
statutory requirements such as taxation, social security and labour laws. The 2016 World Bank survey
report of informal enterprises in Kenya on registration reveals that 53% of the informal enterprises
reported willingness to register. Main reasons for not registering include taxation post registration,
high costs of registration, low perceived benefits from registration, inspections and meetings, and
bribes.
2.4.8 Legal and Regulatory Business Environment
Majority of MSEs in Kenya operate informally. The informality further hinder development of MSEs
as it limits their access to markets and financial services and consequently lowers growth
opportunities. The regulatory business environment constraints have been identified as the third main
constraint experienced by micro (15%) and small (13%) enterprises in Kenya which emanate from
regulatory environment given the multiple licensing requirement and multiple procedures associated
with business registration. Licensing in Kenya is also a costly and time-consuming process that
involves multiple regulatory institutions at the county and the national government levels, multiple
levies and taxes which increase costs of doing business. Further, weak governance of MSEs
associations erodes the envisaged gains of forming associations.
2.4.9 Co-ordination and Implementation of MSEs Policies and Programmes
The sector is faced by weak co-ordination and implementation of policies and programmes,
inadequate capacity of MSEs support institutions and limited engagement of MSEs in the policy
process. There are several actors from public, private and development partners who provide various
support services to MSEs which are largely uncoordinated and/or unmonitored. There is also weak
synergy within government institutions and non-government actors, thus contributing to duplication
of roles, and in some instances policy implementation gaps. The support activities such as capacity
building, business development services, market access are largely disparately undertaken. Moreover,
the Monitoring and Evaluation (M&E) system remains weak.

12
2.4.10 External Business Risks
MSEs are often at a higher disadvantage in the event of external risks, shocks and hazards. This is
experienced by the fact that any business interruption leads to loss of income and investments. Some
risks such as fire are further exasperated by infrastructure challenges as noted above particularly as
relates to road access and other capacity constraints. MSEs especially agri-based are further exposed
to additional risks such as plant and animal pests and disease outbreaks, droughts and floods which
lowers productivity. Other risks MSEs are exposed to that present uncertainty are include droughts,
floods, insecurity and political risks and insecurity. Further MSEs often lack security in terms of land
tenure and often lack insurance to cushion against loss resulting from the risks.
2.5 Strengths, Weaknesses, Opportunities and Threats (SWOT)Analysis of MSEs
Sector
The SWOT analysis of the MSEs sector was undertaken to guide the policy in areas for leveraging
on the strengths, intervention areas to address the weaknesses, exploitation of opportunities and
management of risks posed by the threats. Strengths and weaknesses are internal factors to the MSEs
sector, while opportunities and threats are external to the MSEs sector. The SWOT analysis is
provided in Table 1.

13
 Table 1: SWOT Analysis of MSEs Sector in Kenya
Strengths Weaknesses
• MSE Act 2012 is not aligned to the devolved governance structure and other national, regional and global
• MSE Act 2012 to coordinate development of the sector. developments, and MSEs Development Fund and Registrar of MSEs are yet to be implemented
• Various initiatives to promote activity in the MSEs sector including Kenya Youth • High levels of informality that limit MSEs access to opportunities offered by affirmative platforms such as AGPO
Employment and Opportunities Project (KYEOP), Stawisha SME Mashinani and targeted finance.
initiative, county governments enterprise funds, incubation and innovation support • Limited skills that weakness the human and institutional capacity of MSEs.
(KIRDI, KIE, KEBS), infrastructure development support (MSEA, KIE, MOITED), • Weak industry-academia linkages
and financing support from development finance institutions (KIE, IDB Capital Ltd.; • Weak MSE linkages with medium & large industries either through sub-contracting or part of the supply/value
ICDC) chain.
• Formally established MSE associations to lobby for policies that create an enabling • Low R&D and innovation levels that limit advancing technology used in the sector.
environment for MSEs including accessing markets. • Inadequate appropriate infrastructure including Industrial parks, worksites, markets, utilities, ICT, roads.
• Limited access to affordable finance.
• Weak mainstreaming of gender and PWDs needs.
• Market access constraints.
• Limited knowledge on tax obligations that limit compliance.
• Overlapping mandates and weak coordination of MSEs support institutions.
• Weak governance of MSE associations.
• Low diversification of MSEs products and services with majority of MSEs in wholesale and retail trade sector.
Opportunities Threats
• National and sectoral policies that enhance synergy in development of MSEs. • Multiplicity of licenses and of licensing agencies that increase costs of doing business
• Devolved governance structure with the county integrated development plans • Illicit trade, including counterfeits that narrow opportunities in the domestic market.
prioritizing flagship projects beneficial to development of MSEs. • Rapidly changing technology to keep abreast with competition in globalized markets.
• Huduma centres across the country and Biashara/support centres. • Emerging risks attributed to climate change, diseases and global trade wars.
• Continued automation of the public service delivery system that serves to ease cost • Cyber fraud/crime due to increased usage of ICT-enabled services.
of doing business.
• Existing initiatives that benefit the MSEs – Access to Government Procurement
Opportunities (AGPO), and affirmative action funds targeting youth, women and
persons with disabilities (YEDF, WEF, Uwezo Fund); platforms for trade exhibitions
and trade fairs, and introduction of the Kenya Trade Portal (SDT) and multi-agency
initiatives to combat illicit trade.
• Regional trading blocs and trade agreements for expanded markets e.g. EAC,
COMESA and AfCFTA, AGOA.
• Value addition in agriculture, livestock, blue economy and extractives.
• Robust tertiary institutions to support R&D, innovation, skills and technological
transfer.
• Youthful population.
• Rich database of expired and unexploited patents.

14
 3 CHAPTER 3: MSE SECTOR POLICY STATEMENTS
The policy interventions highlighted in this section are envisaged to address the challenges that
cut across the micro and small enterprises with a view of growing them to medium and
ultimately large enterprises. The policy interventions are anchored on eleven (11) policy
strategic objective areas stated in section 1.4.

3.1 Entrenching the Entrepreneurial Culture

Entrepreneurial culture embodies values, beliefs, mindsets and behaviour that promote or
constrain individuals or communities in starting and operating businesses successfully.
Entrenching entrepreneurial culture aims at gradually mitigating constraints related to these
attributes at individual and community levels to enhance job creation, improve survival rates
of MSEs and inculcate the spirit of ‘start-small grow-big'. The following interventions will be
employed to entrench entrepreneurial culture at individual and community levels:
a) Develop an integrated approach to profile the success stories and benefits of
entrepreneurship, promote peer talks, mentorship and role modelling to provide a platform
for exposure (sharing and encouraging potential entrepreneurs) at grass root level.
b) Inculcate entrepreneurship skills in all levels of education system as a compulsory subject
with a practical orientation.
c) Rebrand the MSEs sector to appeal to all.
d) Establish and maintain an entrepreneurship award at National and County levels, subject to
prescribed conditions.
e) Promote mainstreaming of special interest groups on entrepreneurship.

3.2 Building MSEs Skills to enhance their Capacity

Capacity relates to utilization of knowledge and skills that make MSEs more efficient, adaptive
and responsive to changing market conditions. To enhance managerial skills, financial skills,
technical skills, technology and innovation, and industry relevant skills (link between the sector
and learning institutions) the following interventions will be employed:

a) Provide holistic demand-driven and well-structured capacity building programmes in all

areas of MSEs business operations.
b) Promote skills and technology transfer, acquisition and adaptation for MSEs across the
counties.
c) Strengthen and promote the linkages between the learning and research institutions,
technology developers and MSEs for technology and skills transfer.
d) Create awareness on government initiatives on artisan skills certification.
e) Mainstream the needs of PWDs in the capacity building programs.

3.3 Expanding Market Opportunities for MSEs

Expanding market opportunities will address the top constraint experienced by MSEs; through
enhancing access to information relating to products and inputs, compliance with standards,
15
product and services standardization, certification procedures, local content opportunities,
value addition, use of digital platforms, fair competition, and sub-contracting linkage. Thus,
expanding markets opportunities for MSEs will be anchored on the following interventions:
a) Create awareness on standards requirements for both local and international markets.
b) Ensure compliance and strict enforcement of standards on raw materials, inputs and
products.
c) Support and promote standardization of MSEs products.
d) Create a simplified and responsive digital portal for MSEs to access market information for
products, services and raw materials. The portal will be linked to other relevant digital
platforms.
e) Facilitate bulk purchase of raw materials and inputs for MSEs.
f) Enhance and strengthen the structures and operations of the Enforcement Multi-Agency
Team Against Illicit Trade; and the Multi Agency Anti-Illicit Outreach with representations
of county governments.
g) Promote the acquisition of Intellectual Property Rights/ Support use of IP
h) Create awareness and streamline the existing AGPO systems at all levels of government to
accord equal opportunities to MSEs.
i) Create awareness among MSEs on locally manufactured products for exclusive reservation
in public procurement.
j) Encourage MSEs to join/form associations to benefit from economies of scale and achieve
bargaining power.
k) Create a budgetary allocation in the procurement plan at all levels of government for MSEs.
l) Sensitize and support value addition by MSEs with an aim of producing competitive and
diversified products towards meeting the changing market trends.
m) Establish a sub-contracting framework between MSEs and large enterprises.
n) Establish and enhance MSEs trade fairs and exhibition at Regional, National and County
levels.
o) Conduct regular bilateral cross border trade engagements to facilitate trade, address
existing and emerging issues affecting MSEs and ensure the implementation of the
resolution.
p) Establish creative marketing approaches for MSEs products such as marketing in public
parks on specific days, operating evening markets and temporal closure on certain streets
across all counties.

3.4 Enhancing Access to Affordable Finance

Access to finance include savings, credit, insurance, investments and payment products and
services. The availability and affordability of seed capital, working capital and investments in
assets for expansion of operations are crucial for promotion and development of MSEs. The
intervention on enhancing access to affordable finance are aimed at providing a sustainable
financing ecosystem, considering emerging significance of technology, use of innovative
approaches to overcome collateral deficits and the need to diversify financing; while
recognizing financing sustainability and mitigation of risks.

16
The following policy interventions will be used to facilitate access to a range of affordable
finance for MSEs:

a) Strengthen self-sustaining funds dedicated and easily accessible to MSEs; including

startups with tailor-made financial products at National and County levels of government.
b) Create effective and structured awareness campaigns on availability and accessibility of
available government financing opportunities.
c) Promote and enhance tailor made financial literacy programmes for MSEs.
d) Promote use of non-traditional forms of collaterals such as Intellectual Property Rights
(IPR)assets, movable assets, social security contributions and credit guarantee schemes
amongst others.
e) Establish a framework for micro-leasing for the MSEs.
f) Promote innovative financial products to suit MSEs including insurance products.
g) Encourage partnership in provision of alternative sources of financing for the MSEs.

3.5 Providing Accessible, Affordable and Decent Infrastructure for MSEs

MSEs require a range of infrastructural support including road networks, diverse energy
sources (including green energy), clean water, sanitation and waste management facilities, ICT,
worksites and workspaces, common user facilities, storage facilities, incubation centres,
integrated one-stop shops and centers of excellence. Mainstreaming PWDs accessibility to
infrastructure is an important agenda for inclusive developments. The following are
interventions for infrastructure development and support services for MSEs:

a) Identify, map, zone and secure all land designated for MSEs activities including within the
industrial parks and special economic zones at National and County levels.
b) Integrate the MSEs zones in the National and County government spatial plans.
c) Develop new and revamp existing MSEs infrastructure (worksites, centers of excellence,
incubation centers and common user facilities) which is cluster informed and fully serviced
including in industrial parks and special economic zones across the counties.
d) Establish integrated Biashara centers to offer MSEs support services across counties.
e) Enhance collaboration between National and County governments in development and
maintenance of roads and other utilities within the counties.
f) Establish new and upgrade the existing warehouse facilities to support MSEs across the
country.
g) Enhance and promote local manufacture of affordable tools and machinery for the MSEs
including reverse engineering.
h) Mainstream the needs of PWDs in infrastructure support services.

3.6 Promoting Start-Ups

Start-ups are new businesses with unique ideas to develop products new to the market. Weak
resource base, uncertainties associated with success of such ideas and lack of operating history
of such businesses pose various challenges to the entrepreneurs. Promoting start-ups therefore
seek to promote and develop innovative business ideas through financing, incubation facilities,

17
centers of excellence, uptake of intellectual property rights and commercialization of the
innovations. The following interventions will be used to spur start-ups;

a) Establish an integrated framework for awareness, identification and profiling of innovative

start-ups across all counties.
b) Establish new and strengthen the existing specialized incubation centers for the start-ups
across all counties.
c) Develop capacity for start-ups on Intellectual Property (IP) acquisition.
d) Ease the process of registering Intellectual Property (IP).
e) Establish a structured approach for technology transfer and commercialization of
innovations.
f) Enhance collaboration and incentivize the private sector, learning and research institutions
in promoting start-ups.

3.7 Promoting Formalization of MSEs

Formalization of businesses through registration with government institutions has various

benefits including access to finance, markets and government services. The government would
also have a better understanding of the scope of operations of various business activities in the
economy. The interventions on promoting formalization of MSEs therefore aim to provide a
conducive ecosystem to address low registration and licensing. The following interventions
will be used to promote formalization of MSEs:

a) Create awareness on what registration entails and the accrued benefits to MSEs.
b) Harmonize and streamline processes of registration and issuance of business licenses to
MSEs.
c) Develop and promote creative approaches towards registration and licensing of MSEs.
d) Incentivize MSEs to formalize.

3.8 Strengthening Coordination and Implementation of MSE Policies and

Support Programmes

There are many actors involved in the promotion and development of MSEs, including
government institutions and non-state actors. The success of policy interventions largely
depends on synergies among various actors in implementation of support activities and
monitoring and evaluation. These interventions therefore aim to enhance implementation of
policies and programmes, capacity of MSEs support institutions, MSEs engagement in policy
process, institutional synergies and monitoring and evaluation of programmes. The following
interventions will be used to strengthen institutional framework for supporting MSEs:
a) Develop a framework for coordination, implementation, and monitoring and evaluation of
all MSEs policies, programmes, activities and development plans.
b) Create awareness on the importance of effective associations for MSEs and encourage their
formation.
c) Enhance the capacity of MSEs support institutions.

18
3.9 Providing a Conducive Legal and Regulatory Environment

The legal and regulatory environment has significant implications for costs of doing business
for MSEs. The legal and regulatory environment also provides mechanisms through which
non-government actors can be incentivized to participate in promotion and development of
MSEs. These interventions therefore aim to improve the legal and regulatory environment to
be more supportive and responsive to the productivity, growth and development of MSEs. The
following interventions will be used to provide a conducive regulatory environment for MSEs:
a) Establish an integrated and structured awareness creation approach on laws and regulations
relevant to MSEs.
b) Establish a framework to improve the ease and cost of doing business for MSEs.
c) Provide fiscal and other forms of incentives for the growth and development of MSEs.
d) Strengthen governance in MSEs associations.

3.10 Mitigating External Business Risks

MSEs face higher external business risks due to their nature of operations which poses a threat
to their development. The aim of these interventions under this thematic area is to mitigate
risks. The following interventions are geared towards addressing external business risks in the
MSEs sector
a) Develop effective risk mitigations, adaptations and coping mechanisms against hazards
posing shocks to MSEs.
b) Promote policy certainty for MSEs development.

3.11 Cross-Cutting and Emerging Issues

There are issues that curtail the sustainable development MSEs, some of which are emerging
from national, regional and global developments. The aim of these interventions under this
thematic area is to harness technology and the gains and exploit the opportunities for inclusive
and sustainable growth of the MSEs. The following interventions are geared towards
addressing cross-cutting and emerging issues related to development of the MSEs sector:
a) Promote effective and efficient governance structures to support MSEs.
b) Promote environmentally friendly business practices in MSEs activities.
c) Promote inclusivity of PWDs and other special interest groups.
d) Empower MSEs to exploit existing and emerging opportunities.
e) Enhance the use of technology within MSEs program and initiatives.
f) Develop a framework for knowledge management within the MSEs sector. CHAPTER 4:
POLICY COORDINATION &IMPLEMENTATION
19
3.12 Policy Coordination and Implementation

There are several stakeholders at the national and county levels who are state and non-state
actors, that play a critical role in the implementation of MSEs policies and programmes.
Coordination of the activities undertaken by these stakeholders and the integration of the public
and private sector activities, programmes and development plans relating to MSEs is the
mandate of MSEA as established in the MSEs Act No. 55 of 2012. The Authority in meeting
this mandate, will, in collaboration with the Ministry in charge of MSEs undertake the
following coordination and implementation activities:

1. Review the MSEs Act No. 55 of 2012 to fully align to this policy and accommodate new
developments with the aim of enhancing coordination and implementation of MSEs
policies and programmes.
2. Develop a framework for the coordination and implementation of MSEs policies and
programmes aimed at ensuring efficiency and effectiveness.
3. Adopt a collaborative stakeholder approach for policy planning, budgeting and
implementation through sector and thematic working groups.
4. Establish an effective institutional framework for identifying actors that are involved,
undertake mapping of relevant stakeholders, create a database of MSEs support institutions
and services provided, and disseminate the same as prescribed in the policy interventions.
5. Facilitate the establishment of collaborations among stakeholders with common
interests/goals.
6. Develop a tool to facilitate in monitoring the business environment for the purpose of
informing policy implementation; identifying policy intervention areas and facilitating the
growth and development of MSEs across counties.
7. Undertake frequent research to inform policy decisions.
8. Undertake surveys every five years aimed to inform policy decisions.
9. Adopt effective M&E mechanism as presented in Chapter 5of this policy to continuously
and systematically review, analyze and assess MSEs policies and programmes using an
integrated approach with the overall aim of ensuring effective implementation.

3.13 The Role of Stakeholders

3.13.1 State Actors

The key mandate of the Government is to provide policy direction, interventions and monitor
implementation of the MSEs policy. The stakeholders that will play a central role include: -

The Ministry responsible for MSEs development-formulates relevant policies and provide
MSEs support including infrastructure (special economic zones and industrial Parks), capacity
building for human resource development, finance and promote fair business practices.

The Micro and Small Enterprise Authority (MSEA)- coordinate, monitor and evaluate
policies and programmes and advise the government on the implementation process of MSEs
20
policy. Reports from these activities will be disseminated to implementing agencies and other
stakeholders to inform policy implementation. MSEA is further mandated to undertake
activities that promote and develop MSEs in terms of access to finance, markets, product
development, infrastructure development, technology and capacity building opportunities. In
addition, the office of MSE Registrar which is within MSEA is mandated to register and
regulate MSE Associations.

MSEs Tribunal-resolves disputes among MSEs and between MSEs and support institutions.
The Tribunal is operational.

County Governments have the overall function of development and regulations of markets,
trade licensing and promotion of fair-trade practices. The counties will also collect business
information and management of county Business Information Centers. Other functions of the
counties include county planning and development.

Other Ministries, Departments and Agencies (MDAs) will also play important roles in the
implementation of MSEs policy through provision of intervention support. Key support
functions areas include infrastructural, financial. Product development, market access and
research. These stakeholders are identified in the implementation plan.

3.13.2 Non-State Actors

Micro and small enterprises associations and umbrella business associations will be
integrated in the public policy process as they play important roles in disseminating information
and channeling support services to individual MSEs, as well as monitoring implementation of
the policy and in lobbying the government.
The private sector. The private sector is central in industrial and economic development. The
sector players provide the investment, goods and services necessary in various fields including
infrastructure, training/education, finance and technology for enterprise growth and
development and play an important role in monitoring the implementation of the policy and
providing support to inform implementation.
Development partners provide support to inform implementation of the policy in various ways
including but not limited to financial and technical support.

21
 4 CHAPTER 5: MONITORING AND EVALUATION
Monitoring and Evaluations (M&E) will be adopted to measure efficiency and effectiveness of
the policies. Establishment of the M&E system is informed by the National Monitoring and
Evaluation Policy 2012. The policy prioritizes the establishment of reliable mechanisms to
collect and analyze policy implementation and to assess interventions and programmes related
to MSEs to ensure they meet the intended objectives, outcomes and impacts, ensuring they
remain relevant, efficient, effective, impactful and sustainable. The M&E mechanism is aimed
at providing the government agencies with information on possible interventions and
assessments of performance and impacts. This policy will complement the National M&E
Policy 2012 through provision of timely and accurate information at regular intervals aimed at
informing policy implementation for evidenced-based decision making.
One of the functions of the MSEA as established in the MSEs Act No. 55 of 2012 is to monitor
and evaluate the implementation of existing policies and programmes related to or affecting
MSEs and advise the Government on appropriate policies and course of action to be taken. In
order to institutionalize this legal provision, the government will undertake the following
measures:

1. Build human and institutional capacity within MSEA and in support institutions to
undertake M&E effectively and efficiently.
2. Establish a multisectoral M&E framework for the sector which outlines the objectives,
inputs and outcomes of policies and programs. The M&E framework is intended to ensure
policy interventions are achieved.
3. Establish M&E Plan to outline the resources necessary for the M&E function including
baseline data, stakeholders responsible and data collection tools. The M&E plan will
provide the necessary requirements and accompanying budget. This includes staff,
trainings, workshops and other resources required for data collection, data analysis, data
verification, evaluations and impact assessments.
4. Undertake monitoring through continuous data and information collection during policy
implementation period. To achieve this, the following activities will be undertaken:
i. Strengthen and streamline institutional capacity among implementing agencies at
national and government levels to undertake M&E.
ii. Strengthen reporting of performance in implementation of programmes, policies and
project undertaken at county and national government levels.
iii. Establish a participatory monitoring mechanism involving relevant stakeholders. MSEA
will therefore collaborate with relevant stakeholders to design data collection, reporting
and analysis tools and indicators.
iv. Establish reporting mechanisms from all stakeholders from sub-county level building on
County Integrated Monitoring and Evaluation System (CIMES) and National Integrated
Monitoring and Evaluation System (NIMES).
v. Establish M&E reporting tools with clear SMART indicators, targets, outputs (results)
and, outcomes.

22
 As guided by the National Monitoring and Evaluation Policy 2012, data and information will
inform M&E quarterly and annual reports which will be amalgamated at the Ministerial level
and presented to the Principal Secretary of the State Department for Planning to inform policy
decisions. Data and information will be presented in annual reports which are made accessible
to the stakeholders. The reports will include:
i. Annual reports, as provided in MSE Act 2012 Section 73 which is to provide status,
progress, impact and challenges in the implementation of MSEs development policies
and programmes.
ii. Other monitoring reports aimed at assessing MSE Policy and programme performance.
iii. Data and information captured to inform implementers and other stakeholders on
progress.
iv. Lessons learnt.

The assessment of the policy will be undertaken annually to gauge the implementation
progress. The impact evaluation of the policy will be undertaken every five years to analyze
the extent to which the objectives have been achieved.

23
ANNEX 1: IMPLEMENTATION MATRIX
Policy Issue Interventions Activities Indicators Responsibilities

Entrenching Develop an integrated Map out and document • Documented success stories MSEA, MOITED, KIBT
Entrepreneurship approach to profile the profile for success stories, • Database of mentors& role models County Governments,
Culture success stories and benefits youth peers, pool of Ministry of Youth, Ministry of
of entrepreneurship, promote mentors and role models Information
peer talks, mentorship and Develop an integrated • The communication and dissemination plan of MSEA, MOITED, County
role modelling to provide a communication and action Governments, Ministry of
platform for exposure dissemination plan of Youth, Ministry of
(sharing and encouraging action Information
potential entrepreneurs) at Conduct a TOT targeting No. of peers, role models, and mentors participating MSEA, MOITED, KIBT,
grass root level. peers, role models and in the TOT County Governments,
mentors Ministry of Youth
Establish a mentorship Mentorship programme established MSEA, MOITED, KIBT,
programme County Governments,
Ministry of Youth
Conduct grass root forums • No of forums MSEA, MOITED, County
to communicate success Governments, Ministry of
stories and benefits of Youth, Ministry of
entrepreneurship, Information
Facilitate mass media on Number of documentaries facilitated on MSEA, MOITED, KIBT,
entrepreneurship as entrepreneurship for mass media campaigned County Governments,
desirable career of choice Ministry of Youth, Ministry of
Information
Identify and document Documented entrepreneurship opportunities MSEA, MOITED, KIBT,
entrepreneurship County Governments,
opportunities in the Ministry of Youth, Ministry of
regions/Counties Information, KENINVEST
Establish a Established Frameworks MSEA, MOITED, County
communication and governments, Ministry of
dissemination framework Youth
on entrepreneurship
opportunities.
Participate in University No of colleges/Universities MSEA, MOITED, Ministry
level career events with of Education
the aim of sharing
24
Policy Issue Interventions Activities Indicators Responsibilities

relevant information or
talks on entrepreneurship
Inculcate entrepreneurship Review entrepreneurship Reviewed curriculum Ministry of Education,
skills in all levels of curriculum offered in all TVETA, KICD, CUE, KIBT
education system as a levels of education to Technical Vocational Centres
compulsory subject with a ensure it is provided to all (TVC) and institutions for
practical orientation. students and that it has higher learning
practical orientation

Liaise with Ministry of No. of schools offering entrepreneurship club MSEA, MOITED, Ministry
Education to introduce of Education, KICD
entrepreneurship clubs in
lower level of education
Promote entrepreneurship • No of entrepreneurship and apprentice training Micro and Small Enterprises
and apprentice training programmes Authority, Ministry of youth
programmes for university • No of student beneficiaries Ministry of Industry Trade
students and Enterprise Development,
Ministry of Education
Monitor implementation M&E report MSEA, MOITED, Ministry
of curriculum on of Education, Ministry of
entrepreneurship youth
Rebrand the MSEs sector to A competition targeting Signature song on entrepreneurship MSEA, MOITED County
appeal to all. the youth aimed at Governments, Ministry of
developing signature song Information, Ministry of
on entrepreneurship youth, KEPROBA
A competition targeting Logo developed MSEA, KEPROBA,
the youth to develop a MOITED, County
logo that can be Governments, Ministry of
associated with Kenyan Information, Ministry of
entrepreneurship youth,
Develop and implement a Launched Kenya entrepreneurship brand strategy MSEA, KEPROBA, Ministry
strategy to launch and of Industry Trade and
disseminate the signature Enterprise Development,
song and the logo County Governments,
Ministry of Information,
Ministry of youth,
25
Policy Issue Interventions Activities Indicators Responsibilities

Establish and maintain an Develop an MSE Award criteria established MSEA, MOITED, county
entrepreneurship award at entrepreneurship award governments, development
National and County levels, criteria partners, private sector
subject to prescribed Conduct an Counties and National level awards MSEA, MOITED, county
conditions. entrepreneurship awards governments, development
at the County and partners, private sector
National level
Promote mainstreaming of Develop and implement MSEA, MOITED, NCPWD,
special interest groups on customized programs Customized entrepreneurship promotion programs NGCC, Ministry Youth,
entrepreneurship. targeting special groups to developed TVETA, KIBT
promote entrepreneurship
Building MSE Skills to Provide holistic demand- Conduct regular Training • TNA and skills gap reports KIBT, MSEA, KIRDI, KIE,
enhance their Capacity driven and well-structured Needs Assessment (TNA) • TNA tools development partners
capacity building to identify skills gaps
programmes in all areas of Develop holistic demand- Demand-driven capacity building programmes MSEA, KIBT, TVETA,
MSEs business operations driven capacity building universities, TVETs
programmes delivered by
certified trainers
Establish MSEs clusters No. of clusters established MOITED, MSEA, KENIA,
for ease of skills access KIRDI, KIE, county
and skills transfer governments, Ministry of
Land
Consolidate the capacity No. of harmonized capacity building programmes KIBT, MSEA, KIRDI, KIE,
building programmes and KEBS, TVETA, KICD,
promote synergy between development partners, private
the capacity building sector
institutions
Conduct evaluations and Evaluations and assessments reports MSEA, KIBT, KIRDI, KIE,
assessments of capacity KEBS, TVETA, MED,
building programmes development partners, private
sector
Establish an up-to-date Database established MSEA, MOITED
comprehensive database
on MSEs capacity
building programmes

26
Policy Issue Interventions Activities Indicators Responsibilities

Establish knowledge Repository established MSEA, MOITED, KIBT

repository for capacity
building
Strengthen programmed No. of programmed business development services MOITED, MSEA
business development
services
Promote mentorship and • Mentorship engagement reports MOITED, Ministry of Youth,
apprenticeship through • No. of centers established MSEA, private sector
youth empowerment
centers
Regularly review MSEs No. of curricular reviewed TVETA, KIBT, MSEA,
capacity building KIRDI, KIE, KICD
curricular
Promote skills and Map institutions that offer Report on stakeholder mapping MOITED, MSEA
technology transfer, BDS to MSEs
acquisition and adaptation Strengthen MSE support No of support institutions that have received support MOITED, MSEA, KIBT,
for MSEs across the institutions that offer BDS KIRDI, KIPI, KIE, county
counties. by deploying business governments
development officers to
the counties and
collaborations with
institutions established
from the stakeholder
mapping excise with aim
of also providing
extension services.
Strengthen MSE No of MSE associations with technology acquisition Registrar of MSE
associations to promote and transfer programmes Associations, MSEA, KENIA
technology acquisition
and transfer amongst
members
Establish innovation hubs No. of hubs established MSEA, KENIA. MOITED,
County governments,
development partners, private
sector

27
Policy Issue Interventions Activities Indicators Responsibilities

Development of MSE No. of MSE centers of excellence MSEA, MOITED, KIRDI,

centers of excellence for KIE, NMC, county
common processing and governments, development
manufacturing sites where partners, private sector
technical and precision
equipment can be shared
Strengthen and expand No. of technology and innovation centers MSEA, KIPI, KENIA,
Technology and established KIRDI, KIE, TIVETS,
Innovation Support Universities, county
Centers (TISC) and governments, development
Development of partners, private sector
technology and innovation
centers.
Establish an information Information sharing and learning platform MSEA, MOITED, KIBT
sharing and learning established
platform
Establishment of incentive No. of incentive schemes effected and KRA, National Treasury,
schemes for MSEs e.g. tax operationalized MOITED, MSEA, county
exemptions on acquiring governments, Ministry of
new technologies, Land
subsidies, free land etc.
Establish a framework to • Framework for commercialization of MOITED, MSEA, KIPI,
facilitate innovation established KENIA, KIRDI, TIVETS,
commercialization of • No. of innovations commercialized Universities, county
innovation and research governments, development
outputs partners, private sector
Strengthen and promote the Establish business linkage Linkages and MoUs created and signed respectively MOITED, MSEA, KIPI,
linkages between the program aimed to KENIA, KIRDI, NMC,
learning and research promote partnerships and TIVETS, Universities, county
institutions, technology linkages among the MSEs governments, development
developers and MSEs for and training institutions, partners, private sector
technology and skills technology developers,
transfer. large scale enterprises and
foreign affiliates
Establish incentives and Science and technology parks established MSEA, MOITED, KENIA
financial resources to
28
Policy Issue Interventions Activities Indicators Responsibilities

universities and TIVETs

to support the
establishment of science
and technology parks
Create awareness on Design approach/strategy No. of strategies developed TVETA, MSEA, KIBT
government initiatives on for information
artisan skills certification. dissemination
programmes
Fast-track Certification of No. of master craftsmen certified TVETA, MSEA, KIBT
master craftsmen and No. of technicians certified
skilled technicians for
skills/knowledge transfer.
Mainstream the needs of Review capacity building No. of PWDs friendly capacity building programs NCPWD, MSEA, MOITED,
PWDs in the capacity programmes and material developed KICD, CUE, TVETA, KIBT,
building programs. to ensure they are PWD NITA, Ministry of Education,
compatible Ministry ICT, Innovation and
Youth

Expanding Market Create awareness on Incorporate MSEs in No of MSEs involved in standards development KEBS, MSEA, KIPI, DVS,
Opportunities for MSEs standards requirements for standards development KEPHIS, MOITED
both local and international technical committees
markets. Carry out sectoral No. of sensitization workshops on standards and KEBS, MSEA, KIPI, DVS,
awareness programmes on conformity assessment KEPHIS, MOITED
standards targeting MSEs
Conduct outreach No. of outreach programmes KEBS, MSEA, KIPI, DVS,
programmes with the KEPHIS, MOITED, KIRDI
relevant procurement
entities on use of
standards & registration
of patents
Conduct product specific • No. of trainings held KEBS, MSEA, KEPHIS,
training programmes for • No of MSEs trained KIPI, DVS, MOITED
industry on
implementation of
standards

29
Policy Issue Interventions Activities Indicators Responsibilities

Establish guidelines for Guidelines on the interactions with incubation MSEA, KIPI, KEBS, KIRDI,
interactions of MSEs with centers developed MOITED
innovation centers
Integrate quality and A unit on quality and standards introduced in the KICD, CUE, KIBT, NITA,
standards training in curriculum TVETA, MOITED, KEBS,
academia curriculum MSEA
Ensure compliance and strict Build capacity for MSEs • No. of capacity building programmes carried KEBS,MSEA, MOITED
enforcement of standards on on relevant required out
raw materials, inputs and standards and technical • No. of MSE participants
products. regulations.
Conduct trainings to • No of staff trained KEBS, MSEA, KIBT, KRA,
strengthen institutional • No of organizations certified MOITED
capacity for
implementation of the
standards, legal and
regulatory framework
Undertake market • No of trainings held KEBS, ACA, KRA, KEPHIS,
surveillance, • Operational computerized system PPB,
computerization of the
entry point and training
for inspectors.
Enhance the capacity of Number of KEBS staff trained KEBS, MOITED
KEBS in enforcement of
international standards
including accreditation of
laboratories
Support and promote Perform National No. of harmonized EA Standards KEBs, MSEA, MOITED,
standardization of MSEs Technical meetings for KIRDI
products. harmonization of EAC
regional standards.
Number of MSE regional and international forums KEBS, KIPI, KIRDI, MSEA,
Carry out awareness MOITED,
programmes and promote MSEA, SDT, KenTrade
participation of MSEs
regional and international
standard setting forums
30
Policy Issue Interventions Activities Indicators Responsibilities

Establish a framework to No of MSE products certified MSEA, MOITED, KEBS,

incentivize KIRDI,
standardization and
certification of MSEs
products
Build capacity within No. of capacity building programmes undertaken. KEBs, MSEA, MOITED,
MSEs to increased KIRDI, KenTrade
compliance and
enforcement of standards
on raw materials

Create a simplified and Formation of an easy to Operationalization of the digital platform MOITED, Ken Trade, KEBS,
responsive digital portal for access, regularly updated MSEA
MSEs to access market digital platform that is
information for products, linked to the other
services and raw materials. relevant existing portals
The portal will be linked to for MSEs to access
other relevant digital market information for
platforms. product, services and raw
materials.
Build capacity to MSEs No. of Capacity building programmes conducted MSEA, Ken Trade, KICD,
on access and use of the MOITED, KEBs
digital portal
Facilitate bulk purchase of Enhanced capacity of No of MSEs accessing raw materials and KNTC, MOITED, MSEA
raw materials and inputs for institutions/corporations production inputs
MSEs. charged with bulk
purchase of raw materials
and inputs for production
by MSEs
Strengthen the supply and KNTC, Ministry of
distribution mechanisms No. of MSEs accessing quality raw materials Agriculture, MSEA, MOITED
of quality local raw
materials to MSEs
Enhance and strengthen the Develop a coordinated Established coordinated framework ACA, KEBS, KIPI, KRA,
structures and operations of framework between MOITED, MSEA
the Enforcement Multi- Multi-Agency Team
31
Policy Issue Interventions Activities Indicators Responsibilities

Agency Team Against Illicit Against Illicit Trade; and

Trade; and the Multi Agency the Multi Agency Anti-
Anti-Illicit Outreach with Illicit Outreach and
representations of county various agencies.
governments. Build capacity on the No of officers trained in the multi-agency team ACA, KRA, KIPI, KEBS,
Enforcement Multi- MOITED, Private sector
Agency Team Against
Illicit Trade; and the Multi
Agency Anti-Illicit
Outreach in trade and
development.
Review relevant laws and No. of laws reviewed MOITED, MSEA, KIPPRA,
regulations on illicit trade Attorney General’s office
that pose external risks
and threaten existence of
MSEs
Promote the acquisition of Incentivize the acquisition No of IPs registered KIPI, MSEA, MOITED
Intellectual Property Rights/ of IP rights
Support use of IP. Create awareness on IP • No. Of sensitization campaigns carried out KIPI, MSEA, MOITED
and build capacity to • No. Of capacity building programs carried out
MSEs on the registration
processes
Enhancement of the Guidelines developed KIPI, MSEA, MOITED
protection of Intellectual
Property guidelines to
protect MSEs ideas and
innovations
Conduct regular needs Needs assessment report KIPI
assessment on IP to
enhance the capacity
building programs
Simplification of the No. of IP applications by MSEs a MOITED, MSEA, KIPI,
process of obtaining KENIA, KIRDI, TIVETS,
intellectual property Universities, county
protection for MSEs governments,

32
Policy Issue Interventions Activities Indicators Responsibilities

Create awareness and Review regulations to Reviewed regulations Public Procurement Authority,
streamline the existing accord equal opportunities MOITED, Attorney General's
AGPO systems at all levels for MSEs in access to office, MSEA Government
of government to accord public procurement
equal opportunities to MSEs. opportunities
Create awareness to No. of sensitization campaigns carried out MOITED, MSEA, Public
MSEs on the Procurement Authority
opportunities provided for
them in AGPO
Create awareness among Create awareness among No of awareness campaigns MSEA, Public Procurement
MSEs on locally MSEs on availability of Authority, MOITED, MSE
manufactured products for locally manufactured associations.
exclusive reservation in products for exclusive
public procurement. reservations
Establish a Established Communication and Dissemination MSEA, Public Procurement
communication and framework Authority, MOITED, MSE
dissemination framework associations
to sensitize on the list of
products under public
procurement through the
MSE portal
Encourage MSEs to Sensitize MSEs on the No. of MSEs sensitization held MSEA, Private sector
join/form associations to benefits of forming /
benefit from economies of joining associations
scale and achieve bargaining Strengthen MSEs No. of formal associations formed MSEA, Registrar of MSEs
power. associations through associations, Private sector
training
Support the development No. of associations formed MSEA
of associations Private sector
Create a budgetary Setup a budget line for MOITED, National Treasury,
allocation in the MSEs County government
procurement plan at all Ensure commitment of Prompt payment of MSE suppliers PPRA
levels of government for any procurement process
MSEs. should be subject to
availability of funds

33
Policy Issue Interventions Activities Indicators Responsibilities

Sensitize and support value Prepare No. of products value added MSEA, KIBT, KIE, KEBS,
addition by MSEs with an publicity/awareness KEPHIS, MOITED,
aim of producing creation material and Private sector
competitive and diversified value-added products
products towards meeting model projects and their
the changing market trends. uses and export potential
to stimulate
diversification and in their
production.
Promote product Number of products developed KEBS, KIPI, KEPROBA,
development and branding MOITED, KIE, KENIA,
services by accredited MSEA
service providers to
address standards, quality
and volume requirements
of target markets

Conduct value Value chain studies conducted KIPPRA, MOITED, MSEA

chain/addition studies
Develop and implement Increased market linkages MFA, KENINVEST,
measures to promote MOITED, MSEA, KEBS,
harmonious development KIPI
of linkages between the
domestic and the global
value chains
Sensitize MSEs on the Number of sensitization forums KEPROBA, MSEA,
online marketing, MOITED, KIPI, KIRDI
branding and embracing
the new technological
changes
Establish a sub-contracting Develop a framework for Established sub-contracting framework MOITED, MSEA,
framework between MSEs sub-contracting KENINVEST
and large enterprises.
Establish and enhance MSEs Facilitate the participation • No of trade fairs/exhibitions held
trade fairs and exhibition at of MSEs in fairs at • No of MSEs participating MOITED, County
National and County government, MSEA,
34
Policy Issue Interventions Activities Indicators Responsibilities

Regional, National and level; to showcase their

County levels. products and create
business linkages

Conduct regular bilateral Develop win-win No. of NTBs resolved MOITED, MFA, KRA, KEBS
cross border trade framework for prompt
engagements to address resolution of reported
existing and emerging issues NTBs through bilateral
affecting MSEs and ensure initiatives between Kenya
the implementation of the and other target markets
resolution. bilateral Partner countries
Strengthen the Cross- Reduced cases of NTBs MOITED, MFA, KRA, KEBS
Border Trade Committees
Enhance the capacity of Reduced cases of NTBs MOITED, MFA, KRA, KEBS
cross border trade
associations (CBTAs) to
provide an institutional
framework for small-scale
cross border traders to
lobby the national and
county governments and
regional organizations on
issues affecting cross
border trade
Establish annual meetings No. of meetings held Ministry in charge of EAC,
with neighboring MFA, SDT, KRA, KEBS
countries to solve new and
emerging issues across the
border.
Establish creative marketing Establish a framework • Established framework MSEA, County governments
approaches for MSEs and guidelines for the • Gazettement of demarcated areas
products such as marketing creation of free market
in public parks on specific days for MSEs across
days, operating evening certain streets/designated
markets and temporal areas

35
Policy Issue Interventions Activities Indicators Responsibilities

closure on certain streets Avail single permit MSE single permit business license established County governments
across all counties. business license to all
SMEs operating in
designated
marketplaces/workspaces
and provide protection
against harassment from
any arm of the
Government.
Strengthening self- Hastening MSEs Fund is operationalized National Treasury, MOITED,
Enhancing Access to sustaining funds dedicated operationalization of MSEA,
Affordable Finance and easily accessible to funds dedicated to MSEs
MSEs; including start-ups with flexible terms.
with tailor-made financial Support the development County Enterprise Fund operationalized County governments, National
products at National and of County Enterprise Treasury
County levels of Funds that meet the needs
government. of MSEs
Create effective and Identify and document Documented financing opportunities MSEA, MOITED, County
structured awareness National and County governments
campaigns on availability Government financing
and accessibility of available opportunities
government financing
opportunities. Establish a Established communication and dissemination MSEA, MOITED, County
communication and framework governments, MSE
dissemination framework Associations
on National and County
Government financing
opportunities
Promote and enhance tailor Conduct regular training Training Need Assessment Reports MSEA, MOITED
made financial literacy needs assessment (TNA)
programmes for MSEs. to determine the gaps in
financial literacy.

Develop financial literacy • Developed financial literacy programs MSEA, MOITED, Private
program • No of MSEs participants sector, Development partners,
SACCOs, CRB, Financial
36
Policy Issue Interventions Activities Indicators Responsibilities

sector regulators, Financial

sector Associations, KIBT
Training of Trainers No. of Trained Trainers MSEA, MOITED, KIBT,
(TOT) informed by needs Financial Sector Association,
assessment MSE Association, KIE, WEF,
YEDF
Promote use of non- Enhance awareness on No. of awareness campaigns CBK, MSEA, MOITED,
traditional forms of Collateral Registry KENIA, KIPI, KECOBO
collaterals such as System for movable Financial Sector Associations,
Intellectual Property Rights property Financial sector regulators
(IPR) assets, movable assets, Establish a credit Credit Guarantee scheme established The National Treasury,
social security contributions guarantee system for MOITED, MSEA,
and credit guarantee MSEs Development Partners, Private
schemes amongst others. sector
Sensitize financial service No. of financial institutions utilizing non-traditional Financial Sector Associations,
providers on available forms of collateral MSEA, MOITED, Private
non-traditional forms of sector.
collaterals
Establish a framework for Review relevant laws to Reviewed laws on micro-leasing MSEA, The National
micro-leasing for the MSEs. facilitate micro-leasing to Treasury, MOITED, Financial
MSEs Sector Regulators
Establish micro-leasing Established micro-leasing guidelines and MSEA, CBK, Financial
guidelines and regulations regulations Sector Regulators
Create awareness on the No of Financial Institutions providing micro-leasing MSEA, MOITED, Financial
micro-leasing for MSEs Institutions
opportunities available
targeting Financial
institutions and MSEs
Promote innovative financial Review relevant laws with Reviewed laws MSEA, MOITED, CBK,
products to suit MSEs the aim of facilitating Financial sector Regulators
innovation in the
provision of financial
services.
Encourage financial No. of tailor-made financial products MSEA, Financial Sector
institutions to establish Regulators, Financial Sector
financial products that are
37
Policy Issue Interventions Activities Indicators Responsibilities

responsive to the needs of Associations, NCPWD,

MSEs with consideration NGEC, WEF, YEDF
of their structural
differences and further
incorporating needs of
special interest groups
Encourage partnership in Identify and document Documented alternative sources of financing MSEA, MOITED, County
provision of alternative alternative sources of governments
sources of financing for the financing for MSEs
MSEs.
Establish a Established communication and dissemination MSEA, MOITED, County
communication and framework governments, MSE
dissemination framework Associations
to sensitize alternative
sources of financing for
MSEs
Providing Accessible, Identify, map, zone and Identify, map and Status report on MSEs land MSEA, MOITED, County
Affordable, and Decent secure all land designated document MSEs land governments, Ministry of
Infrastructure for MSEs for MSEs activities across the country Land, MSE Associations
including within the Secure all identified List of parcels of MSEs land secured MSEA, MOITED, County
industrial parks and special MSEs land governments Ministry of Land
economic zones at National Zone identified MSEs Zoning reports MSEA, MOITED, County
and County levels. land governments, Ministry of
Land
Issuance of title deeds to Number of title deeds issued MSEA, MOITED, County
all identified MSEs land governments, Ministry of
Land
Integrate the MSEs zones in Incorporate worksites, Spatial plans with MSEs zones MSEA, MOITED, County
the National and County industrial zones, MSE governments, Ministry of
government spatial plans. parks and other MSE Land
zones in both levels of
government spatial
planning
Involve MSEs in the MSE approved designs MSEA, MOITED, County
design of worksites, governments, Ministry of
industrial zones, MSE
38
Policy Issue Interventions Activities Indicators Responsibilities

parks and other MSE Land, MSE Associations,

zones KIE, KIRDI, SEZA, EPZA
Develop new and revamp Develop national MSEs Master plan MSEA, MOITED, County
existing MSEs infrastructure infrastructure Master Plan governments, Ministry of
(worksites, centres of that is responsive to the Land, MSE Associations,
excellence, incubation needs of MSEs with KIE, KIRDI, SEZA, EPZA,
centres and common user consideration of their NGEC, NCPWD
facilities) which is cluster structural differences and
informed and fully serviced further incorporating
including in industrial parks needs of special interest
and special economic zones groups
across the counties. Establish status of Status report MSEA, MOITED, KIE,
existing infrastructure KIRDI
Renovate and update No. of renovated infrastructure MSEA, MOITED, County
existing infrastructure governments, Ministry of
Land, MSE Associations,
KIE, KIRDI, Private sector
Establish new fully No. of new fully serviced infrastructure MSEA, MOITED, County
serviced infrastructure governments, Ministry of
informed by the master Land, MSE Associations,
plan SEZA, Private sector

Offer preferential tariffs Number of utilities setup KPLC, Water and Sewerage
for utilities and other providers, County
incentives in MSEs Government,
clustered zones.
Establish integrated Undertake study on Study report MOITED, MSEA, Ministry of
Biashara centres to offer establishment of Biashara ICT, ICT Authority, Huduma
MSEs support services centres in Counties Secretariat, KIPPRA
across counties.
Establishment Biashara No. of Biashara centres set up MOITED, MSEA, Ministry of
centers informed by the ICT, ICT Authority, Huduma
study, leveraging on Secretariat
existing infrastructure and
existing initiatives

39
Policy Issue Interventions Activities Indicators Responsibilities

(Huduma centers and

Pasha centers)
Enhance collaboration Establish a framework to Established coordination framework for the MSEA, MOITED, County
between National and improve coordination and development and maintenance of roads governments, Ministry of
County governments in collaboration of both Land, MSE Associations,
development and levels of government and Ministry of infrastructure and
maintenance of roads and Agencies mandated with Urban planning
other utilities within the management of roads
counties. Involve MSEs in the MSE in public participation forums MSEA, MOITED, County
process of development of governments, Ministry of
roads Land, MSE Associations,
Ministry of infrastructure
Involve MSEs in the MSEs in public participation forums KPLC, Water and Sewerage
process of development of providers, County
utilities Government,
Establish new and upgrade Identify and map Mapping report MOITED, MSEA, County
the existing warehouse warehouses across the governments, Ministry of
facilities to support MSEs country lands Development Partners
across the country. Establish new warehouse No. of warehouses established MOITED, MSEA, County
facility informed by the governments, Ministry of
mapping exercise lands, Development Partners
Undertake country wide National warehouses need report MOITED, MSEA, County
warehouses need analysis governments, Ministry of
lands Development Partners
Renovate and upgrade No. of renovated warehouses MOITED, MSEA, County
warehouses informed by governments, Ministry of
the need analyses. lands, Development Partners
Enhance and promote local Undertake machinery & Need analysis report MOITED, MSEA, NMC
manufacture of affordable tools need analysis KENIA, KIRDI
tools and machinery for the Develop and implement Completed Strategy MOITED, MSEA, NMC,
MSEs including reverse reverse Engineering KENIA, KIRDI
engineering. Strategy
Establish capacity Implement reverse engineering strategy MOITED, MSEA, NMC
required for local KENIA, KIRDI
manufacture of

40
Policy Issue Interventions Activities Indicators Responsibilities

machinery, tools and

parts.
Formulate a development Development and manufacturing plan MOITED, MSEA, NMC
and manufacturing plan Development Partners
for machinery & tools
Develop and implement Number of machinery & tools manufactured NMC, MSEA, KENIA,
the machinery & tools MOITED
manufacturing plan
Mainstream the needs of Incorporate the needs of PWDs friendly working environment MOITED, MSEA, NCPWD,
PWDs in infrastructure PWDs in establishment of Private sector, Development
support services. worksites, industrial partners, MSE Associations
zones, MSE parks, spatial
plans, warehouses,
machining and tools
Promoting Start-ups Establish an integrated Identify and document Report on documented start-ups MSEA, MOITED, County
framework for awareness, successful innovative Governments, KENINVEST
identification and profiling startups across all
of innovative start-ups counties
across all counties. Establish a Established communication and dissemination MSEA, MOITED, County
communication and framework governments, MSE
dissemination framework Associations. KENIVEST
for awareness creation n
successful innovative
start-ups
Establish new and Identify and document all Report on incubation centres and their area of MSEA, MOITED, County
strengthen the existing the existing incubation specialization governments
specialized incubation centers
centres for the start-ups
across all counties. Conduct regular needs Need Assessment Reports MSEA, MOITED, KENIA
assessment to determine
the incubation needs and
priorities for start ups
Establish a mechanism for No. of established partnerships MSEA, MOITED, KENIA,
matching the incubate KIRDI, KIE, Private sector,
with relevant partners Development sector
based on their needs
41
Policy Issue Interventions Activities Indicators Responsibilities

Establish an incubation • Established incubation policy MOITED, MSEA, KENIA,

policy and guidelines • Established incubation guidelines KIRDI

Develop capacity to start- Establish awareness • No. of awareness campaigns MSEA, KENIA, KIPI,
ups on Intellectual Property creation and capacity • No. of capacity building programs KECOBO
(IP) acquisition. building programs on IP • No. of IP applications by MSEs

Build capacity within • No. of capacity building programs KIPI, KENIA, MSEA
MSEs to undertake • No of MSEs participating
technology mining in the
patent databases
Leverage on technology No of start-ups accessing technology and innovation KIPI, KENIA, Tertiary
and innovation support support centers Institutions, research
centers to provide institutions.
information and data on
IP
Ease the process of Decentralize activities No. of KIPI desks established outside Nairobi KIPI
registering Intellectual carried out by KIPI
Property (IP).
Commence online filing No. of online filing received by KIPI
of IP applications and KIPI
initiate online updates on
processing progress
updates
Advise on fast tracking of Operational \automated notification of processing of KIPI
IP applications applications
Establish a structured Strengthen the Operational Technology KIPI, KENIA, Tertiary
approach for technology Technology transfer transfer desk at various Institutions, research
transfer and agreement desk Institutions institutions
commercialization of
innovations. Carry out scouting to No. of Innovations identified KIPI, KENIA, MSEA,
identify MSE innovations Tertiary Institutions, research
that may qualify for institutions
development and
commercialization
42
Policy Issue Interventions Activities Indicators Responsibilities

Training MSEs and assist No. of trainings on drafting KIPI, KENIA, MSEA,
on drafting MOUs and MOUs and technology Tertiary Institutions, research
technology transfer transfer agreement institutions
agreement for the purpose (IP Management)
of commercializing
protected technologies
Provide access to Established technology database KIPI, MSEA, KENIA
technologies information
Enhance collaboration and Establish a framework for Established Framework
incentivize the private incentives to private MSEA, KENIA, KIPPRA
sector, learning and research sectors, tertiary
institutions in promoting institutions and research
start-ups. institutions to support
start ups
Promoting Formalization Create awareness on what Sensitization of • No. of sensitization forums MSEA, Registrar of
of MSEs registration entails and the registration and licensing • No of MSEs participating Companies, County
accrued benefits to MSEs. of MSEs using Government, Licencing
appropriate Agencies
communication channels
and materials
Harmonize and streamline Decentralize registrar of No. of decentralized registration points Registrar of companies
processes of registration and companies
issuance of business licenses Simplify business • No. of business registration steps that have been Registrar of companies
to MSEs. registration procedure by consolidated.
reducing the length and • No. of days required to register a
number of requirements company/partnership/business name
needed and enhanced
administrative co-
ordination in MSE
registration
Enhance awareness for e- No. of MSEs accessing online registration services. MSEA, Registrar of
registration processes for companies, Huduma
MSEs Secretariat, ICT authority,
Reduce the fees required Registration fees Registrar of companies
to register MSEs

43
Policy Issue Interventions Activities Indicators Responsibilities

Review and harmonize Reviewed laws and regulations pertaining MSEA, Registrar of
laws and regulations registration of MSEs Companies, County
pertaining registration of Government, KIPPRA
MSEs
Provision of a one stop No. of Biashara centers established MSEA, MOITED
shop for all business
licensing services
Automate business No. of licenses obtained online County Government,
licensing activities regulatory agencies

Reduction of fees and No. of days needed to obtain a business license County Government,
time taken for licensing Amount of license fees charged regulatory agencies
Adopt Regulatory Impact RIA reports County Government,
Assessment (RIA) in the regulatory agencies
establishment of licensing
regulation
Continuous evaluation of No. of assessment reports on licensing agencies National treasury, Council of
licensing agencies on performance Governors Office
delivery of their mandates
Establish sensitization and • No. of sensitization campaigns MSEA, County Government
capacity building • No. of capacity building programmes
programmes among • No of MSEs licensed and registered with relevant
MSEs on benefits of authorities
licensing and registration
for their members
Develop and promote Undertake research on No. of research Published/Unpublished KIPPRA, MSEA
creative approaches towards innovative approaches
registration and licensing of towards the registration
MSEs. and licensing of MSEs
undertaken in different
countries.
Develop action points Documented action points KIPPRA, MSEA
informed by the study
Incentivize MSEs to Establish sensitization and MSEA, County Government,
formalize. capacity building • No. of sensitization campaigns Registrar of companies
programmes among • No. of capacity building programmes
44
Policy Issue Interventions Activities Indicators Responsibilities

MSEs on benefits of • No of MSEs participating

licensing and registration
for their members
Undertake review of Tax Policy stipulating tax holidays for MSEs National Treasury, KIPPRA,
holidays and exemptions MSEA, County Government,
available and Registrar of companies
opportunities to MSEs
Sensitization of MSEs on No. of campaigns KRA, MSEA, County
the effect of taxation upon Government, Registrar of
registration companies

Priority of public No. of formal MSEs accessing AGPO KRA, MSEA, County
procurement activities to Government
formalized MSEs
Promote market linkages No. of market linkages established MSEA, County Government,
of formal MSEs and Registrar of companies
Medium and large firms
Avail single permit • Single permit for MSEs County Government,
business license to all • Semi-permanent licenses to MSEs with KIPPRA, relevant government
MSEs operating in temporary workstations agencies
designated workspaces
Strengthening Develop a framework for Develop an M&E plan • M&E plan developed MSEA, MSEs support
Coordination and coordination, detailing the evaluation • Data collection tools developed institutions, Research
Implementation of MSE implementation, and framework, indicator • No. of M&E reports institutions
Policies and Support monitoring and evaluation of system, data collection &
Programmes all MSEs policies, analysis, responsibilities,
programmes, activities and impact evaluation design,
development plans. dissemination and
utilisation plan.
Review MSE Act to Reviewed MSE Act MSEA, MOITED, KIPPRA,
ensure alignment to this Attorney General’s Office
policy and to enhance
coordination National Council for Law
Reporting

45
Policy Issue Interventions Activities Indicators Responsibilities

Create awareness on the Develop and disseminate • No. of pamphlets distributed Registrar of MSEs
importance of effective pamphlets on processes • No. of MSEs associations registered associations, County
associations for MSEs and and importance of governments
encourage their formation. registering MSEs
associations
Resource the Registrar of No. of outreach programmes MOITED, MSEA
MSEs associations to
have regular country-wide
outreach programmes
Enhance the capacity of Conduct MSEs frequent No. of surveys conducted MSEA, KIPPRA
MSEs support institutions. needs assessment surveys
Publish and disseminate No. of needs assessments reports MSEA, KIPPRA
findings of MSEs needs
assessment surveys
Sensitise support No. of sensitisation forums MSEA
institutions on MSEs
priority interventions
Hold regular stakeholder No. of stakeholder engagements MOITED, MSEA, MSEs
engagements on MSEs support institutions
support activities
Enhance the capacity of Conduct needs No. of surveys conducted MSEA, Registrar of MSE
MSEs associations assessments surveys on Associations, MSEs training
MSEs association institutions
Develop and administer No. of trainings MSEA, MSEs training
relevant trainings based institutions
on the needs
Providing a Conducive Establish an integrated and Develop and disseminate No. of pamphlets MOITED, MSEA
Legal & Regulatory structured awareness pamphlets on laws and
Environment creation approach on laws regulations tailored to key
and regulations relevant to sectors
MSEs. Conduct trainings • No. of trainings conducted MOITED, MSEA
targeting MSEs • No, of MSE Associations trained
associations on laws and
regulations tailored to key
sectors

46
Policy Issue Interventions Activities Indicators Responsibilities

Establish an outreach No. of outreach programmes conducted MOITED, MSEA

programme to publicise
and disseminate laws and
regulations relevant to
MSEs
Develop a web portal for Digital portal developed MOITED, MSEA
laws and regulations
relevant to MSEs
Establish a framework to Develop a tool for Tool developed MSEA, KIPPRA
improve the ease and cost of assessing ease and cost of
doing business for MSEs. doing business for MSEs
Conduct ease and cost of No. of assessments conducted MSEA, KIPPRA
doing business
assessments periodically
Hold policy forums on No. of policy forums conducted MOITED, MSEA, KIPPRA
business environment
challenges
Provide and promote fiscal Conduct situational Situational analysis report MOITED, MSEA, Attorney,
and other forms of analysis on existing General’s Office, CoG,
incentives for the growth incentives for growth and KIPPRA
and development of MSEs. development of MSEs
Review relevant No. of legislations reviewed/enacted MOITED, MSEA, National
legislations to provide Treasury, KRA, Attorney
MSEs-friendly incentives General’s Office, KIPPRA
Establish an outreach No. of outreach programmes conducted MOITED, MSEA, KIPPRA,
programme to publicise CoG, Attorney General’s
incentives Office, National Council for
Law Reporting
Strengthen governance in Operationalize the Fully operationalized registrar of MSEs Association National treasury, Attorney
MSEs Association registrar of MSEs General’s Office, MOITED,
Associations MSEA

Develop and streamline Governance tool kit developed MSEA, Registrar of

governance toolkit for the Associations
operation for MSEs
Associations
47
Policy Issue Interventions Activities Indicators Responsibilities

Mitigating external Develop effective risk Identification of hazards Hazards and risks identification report National government, County
business risk mitigations, adaptations and and risk factors related to governments, Disaster
coping mechanisms against MSEs management institutions
hazards posing shocks to
MSEs. Undertake risk analysis Risks analysis and risk evaluation report National government, County
and risk evaluations governments, Disaster
management institutions

Develop a multi-hazard Risk reduction and risk mitigation plan MOITED, National
and multi-sectoral risk government
reduction and risk County governments, Private
mitigation plan sector

Establish mechanisms to No. of coping mechanisms developed MOITED, National

support MSEs cope with government
and recover from risks County governments, Private
occurrences sector

Develop and roll-out • No. of capacity building programmes MSEA, MSEs support
capacity building developed institutions
programmes on risks • No. of capacity building programmes Development partners
management and disaster conducted
preparedness
Promote policy certainty for Hold regular policy • No. of county-level policy dialogues National government, County
MSEs development. dialogues on development • No. of national-level policy dialogues governments, MSEA
of MSEs at county and
national levels

Conduct regular policy No. of evaluations National government, County

implementation governments, MSEA
evaluations

Cross-Cutting & Promote effective and Review the structures of Review conducted MOITED, MSEA
Emerging Issues efficient governance support institutions to
structures to support MSEs. entrench transparency and
accountability
48
Policy Issue Interventions Activities Indicators Responsibilities

Organise capacity • No. of capacity building programmes MSEA, Registrar of MSEs

building programmes conducted associations
targeting officials of • No. of MSE associations beneficiaries
MSEs associations
Promote environmentally Develop and disseminate No. pamphlets developed and disseminated MOITED, MSEA, NEMA
friendly business practices in pamphlets on
MSEs activities. environmentally friendly
business practices
Develop tax incentives to No. of incentives developed MOITED, National Treasury
promote efficient and Planning, KRA, MSEA
production by MSEs
Develop awards to No. of incentives developed MOITED, MSEA, NEMA,
promote efficient County governments, Private
production by MSEs sector
Development partners
Promote inclusivity of Undertake an audit of Audit assessment MOITED, Ministries
PWDs and other special MSEs worksites’ and responsible for youth, women,
interest groups. common user facilities labour and ICT, MSEA,
compliance with PWDs NCPWD, County
needs governments, Private sector
Development partners
Carry out awareness No. of awareness campaigns conducted MOITED, MSEA, PPRA,
creation campaigns on NCPWD
how to access markets
particularly government
procurement opportunities
Develop tailor-made Communication materials developed and MOITED, MSEA, PPRA,
communication materials disseminated NCPWD
for PWDs
Empower MSEs to exploit Conduct regular forums No. of forums MSEA, MOITED, Ministry of
existing and emerging for discussing emerging education, Ministry of ICT,
opportunities. opportunities Ministry of agriculture,
livestock, fisheries and
cooperatives, County
governments

49
Policy Issue Interventions Activities Indicators Responsibilities

NACOSTI, KENIA,
KenInvest
Vision 2030 Secretariat, KIPI,
KIRDI, KIE, KEBS,
KEPROBA,
Private sector, Development
partners
Map and publish county Mapping of opportunities undertaken and published MSEA, Ministry of Trade
specific opportunities Ministry of agriculture,
relevant to MSEs livestock, fisheries and
cooperatives, County
governments, KenInvest
Vision 2030 Secretariat,
Private sector, Development
partners
Develop capacity building Capacity building programmes conducted MSEA, Ministry of Trade,
programmes tailored to Ministry of education,
emerging opportunities Ministry of ICT, Ministry of
agriculture, livestock, fisheries
and cooperatives, County
governments, NACOSTI,
KENIA,
KenInvest, KIPI, KIRDI, KIE,
KEBS, KEPROBA, Private
sector, KIBT
Enhance the use of Conduct regular No. of surveillance MOITED, Ministry of ICT,
technology within MSEs surveillance and ICT Authority, MSEA,
programmes and initiatives. dissemination forums on NACOSTI, KENIA, KIPI,
emerging technology KIRDI, NMC, TVETS and
relevant to MSEs Universities, Research
institutions
Monitor and document Technology database MSEA, KENIA, KEBS, KIPI,
latest technology KIRDI
Utilise ICT in MSEs No. of ICT-enabled services by support institutions MSEA, All MSEs support
support services institutions

50
Policy Issue Interventions Activities Indicators Responsibilities

Develop a framework for Identify and document No. of indigenous knowledge documented KIPI, MSEA, KECOBO,
knowledge management indigenous knowledge for KENIA,
within the MSEs sector. application by MSEs County governments
Establish mentorship • Mentorship programmes established MOITED, MSEA,
programmes and facilitate • No of MSEs participating Development partners, Private
transfer of indigenous sector
knowledge and skills
Facilitate access to online • No. of knowledge resource centres MOITED, ICT Authority,
patent and non-patent • No. of knowledge resource databases MSEA, KIPI, TVETs and
knowledge resource Universities, Development
centres and databases partners, Private sector

51