DBA 403:

ENTREPRENEURSHIP
7th April 2022
 ENTREPRENEURSHIP
DEVELOPMENT IN KENYA
 Session Objectives

• At the end of the session, students should be able to

understand:
vBackground
vHistorical perspective of entrepreneurship
vEntrepreneurship policy environment in Kenya
vRole of government in entrepreneurship
promotion
The Policy dilemma: To be or not to
be entrepreneurs
Pros Cons

• Entrepreneurs boost economic • Only a few people have the drive to

growth by introducing innovative become entrepreneurs.
technologies, products, and services. • Entrepreneurs face a substantial risk
• Increased competition from of failure, and the costs are
entrepreneurs challenges existing sometimes borne by taxpayers.
firms to become more competitive. • In the medium term, entrepreneurial
• Entrepreneurs provide new job activities may lead to layoffs if
opportunities in the short and long existing firms close.
term. • A high level of self-employment is
• Entrepreneurial activity raises the not necessarily a good indicator of
productivity of firms and economies. entrepreneurial activity.
• Entrepreneurs accelerate structural • Entrepreneurship cannot flourish in
change by replacing established, an overregulated economy.
sclerotic firms.

Source: Alexander S. Kritikos, 2014

The World’s To-Do List by 2030
 The need for at appropriate policy
formulation and development in Kenya
• The Kenyan economy has enjoyed both periods of great
advances and disheartening downturns.
• Incidences of poverty and unemployment, meagre foreign
exchange earnings (exports of primary product mainly agro-
produce) have resulted in unfavourable balance of payment
and low per capita income
• It is estimated that > 43 % of Kenya’s population live below
the poverty line
• While, the overall population growth rate has experienced a
decline over the last 2-decades, unemployment continues to
increase
• As a result, lack of productive employment opportunities has
led to a fall of real wages in nearly all the sectors of the
economy
 Industrialisation as a Panacea?
• It has been acknowledged that in order to cope with these
challenges, the economy will have to consistently grow at
between 8-10% annually.
• Thus, through rapid sustained economic growth, national
wealth can be created, leading to increased employment and
incomes and viable enterprises
• These in turn will provide the resources to support measures
to alleviate poverty, protect vulnerable groups and provide
rising standards of living for Kenyans
• It is well recognized that industrialization is a means through
which Kenya can accelerate its economic growth
• Indeed, all indicators show that Kenya’s goal of rapid and
sustained growth cannot be achieved in the absence of
industrialization, as has also been demonstrated in all NICs
 Previous Policy Instruments
• Sessional Paper No.10 of 1965 on “African Socialism and
its Application to Planning” in Kenya set the pace in the
introduction of small enterprises in the economy
Ø The Sessional paper on “African Socialism and its Application
to Planning in Kenya” set the pace in the introduction of small
enterprises in the economy.
Ø The paper sought to indigenise the economy by encouraging
foreign enterprises to equip Kenyan Africans with necessary
skills through training, apprenticeship programmes, to enable
them operate private business
• Sessional Paper No. 10 of 1973 on “Employment”
Ø The desire to Kenyanize the economy
Ø It attempted to assist small enterprises to access working sites,
credit, managerial and technical services, skill upgrading and
business training services
 Previous Policy Instruments (ctd)
• Sessional Paper No. 5 of 1982 on “Science and Technology
for Development” recognised that Science and Technology
provides the knowledge with which to identify opportunities
and to increase growth rates. The Paper recommended;-
Ø that the GOK should deliberately, but conscientiously expand its
research system to cover all sectors of the economy
Ø Increased levels of funding to 1% of GDP for Research and
Experimental Development; Acquisition and Transfer of
Technology Policy; Capacity Building for Technological
transformation
• Sessional Paper No 2, 1985 on Unemployment. The paper
appreciated the importance of MSE sector in the economy and
sought to encourage it to expand. It however fell short of
providing concrete solutions to the sector’s accessibility to
credit, technical and marketing assistance
 Previous Policy Instruments (ctd)
• Sessional Paper No.1 of 1986 on “Economic Management
for Renewed Growth” together with the Sixth National
Development Plan (1989-1993) tried to accelerate MSE
growth by;-
Ø amend the rules and regulations that inhibit MSEs
Ø To limit unfair trade practices by large scale firms
Ø To change cost-price relations in favour of MSEs
Ø To address constraints that limit access of MSEs to finance and
credit.
• Sessional Paper No 2 of 1992 on “Small Enterprise and
Jua Kali Development in Kenya” was released to address
similar problems affecting MSEs. It emphasized on the
creation of an enabling legal and regulatory environments
that support the sector’s graduation into formal sector.
 Previous policy Interventions (ctd)
• Sessional Paper No 2 of 1996 on “Industrial
Transformation to the Year 2020” proposed measures to
remove bottlenecks that hinder the potential MSEs in serving
as seed bed for industrialization. It also proposed;
– a review government procurement regulations and procedures to
allow MSEs to provide goods and services to Government
– rationalization of licensing regime to make it simpler and
cheaper
– a recognition that in order for Kenya to achieve and maintain
competitiveness in the global market, technology, among others,
will play a major role
– It also encouraged private sector to invest in technology
development (independently or in collaboration with public R&D
institutions)
 Previous Policy Interventions (ctd)
• Economic Recovery Strategy for Wealth and Employment
Creation (2003-2007). The release of the blueprint became
necessary to address the three challenges of;-
Ø Creating Employment;
Ø Creating Wealth;
Ø Reducing Poverty
• The blueprint also recommended “Enhanced support for R&D
for industries by reviewing the tax incentives for doing research
and zero rating research-related equipment”, among others
• It emphasized on the desire to facilitate MSEs to graduate in
employment size. This was further strengthened by the release
of Sessional Paper No.2, 2005, on Development of Micro and
Small Enterprises for Wealth and Employment Creation for
Poverty Reduction.
 Previous Policy Interventions (ctd)
• Sessional Paper No.2 of 2005 on Development of Micro
and Small Enterprises for Wealth and Employment
Creation for Poverty Reduction sought to enhance the
capacity of MSEs to generate wealth as well as durable and
decent jobs
• Vision 2030 developed in 2006, was built on Social,
Economic and Political Pillars and had the following
ambitious targets;-
Ø a globally competitive and prosperous nation with high quality
of life by 2030;
Ø Per Capita income ranking among the the five highest in Africa;
Eliminating absolute poverty and building an equitable and just
society;
Ø Becoming Africa’s most competitive economy;
Ø 10% growth in GDP for the next 25 years (12 years?).
 Comprehensive Policy Framework
• In 2009, a comprehensive policy on Science, Technology and
Innovation Policy and Strategy (STIPS) document was
developed.
• Furthermore, the 2010 Constitution recognized the role of
indigenous innovations in development. Article 11 section 2 b
and c of the constitution reads: “recognise the role of science
and indigenous technologies in the development of the nation;
and promote the intellectual property rights of the people of
Kenya.”
• To operationalize the constitutional requirement for recognition
of indigenous knowledge, a sessional paper on science and
technology was published, and in 2013, the Science, technology
and Innovation Act enacted. . Similarly, this led to led to the
development of several institutions that support innovation.
• STIPS prioritized eight areas for intervention
 The Missing Gap
• The proposed interventions have clearly not necessarily yielded
the expected results
• New policies continue to be formulated to address more or less
the same problems that previous policies were meant to tackle.
• Gap between MSEs and Medium enterprises on one hand and
that between Medium and Large enterprises suggest that few of
the MSEs graduate to the Medium level
• While MSEs generate employment and wealth, the majority are
unable to grow vertically, thus resulting in the gap between
MSEs and the Large enterprises, i.e. the missing middle/gap
• It is now well acknowledged that without vertical growth it
would be difficult for MSEs to generate sustainable
employment and serve as seedbed for industrialization.
Reasons for Entrepreneurship not being
successful and limited Vertical Growth
• Inadequate Entrepreneurial traits
• Inadequate Entrepreneurial Education
and skills
• Inadequate Financing / Credit Markets
• Lack of clear Vision what the
Entrepreneurs hope to achieve
• Poor infrastructure eg roads, utilities,
• Inadequate markets/ Market
Information
• Local Competition
• Perceived insecurity
• Problems with the regulators/Law
• Low Technological Advancement
Entrepreneurship in a Developing Economy
• Entrepreneurship is important to economic development.
• From a public policy perspective, entrepreneurship is seen
as one of the driving forces behind a modern economy.
• The benefits to society will be greater in economies where
entrepreneurs can operate flexibly, develop their ideas, and
reap the rewards.
• Entrepreneurs respond to high regulatory barriers by
moving to more innovation-friendly countries or by turning
from productive activities to non-wealth-creating activities.
• To attract productive entrepreneurs, governments need to
cut red tape, streamline regulations, and prepare for the
negative effects of layoffs in incumbent firms that fail
because of the new competition.
 Kenya Government Interventions
• Vision 2030 – 3 Pillars of Social, Economic and
Political Changes
• Supporting Medium Term Plans and changes
• Other enabling Policy drivers
• Institutional Reforms
• Infrastructural development
 Some Key Considerations
• The promotion of an entrepreneurship culture and more favourable
attitudes towards entrepreneurship;
• The integration of entrepreneurship education in schools and at all
levels of post-secondary education;
• A reduction in the barriers to entry and re-entry, combined with pro-
active measures to make it easier for enterprises to enter the market;
• The provision of seed finance to facilitate business creation and
subsequent development;
• The various types of start-up business support including mentoring
programmes and business incubators, designed essentially to
increase the number of new businesses and nurture their early
development;
• Tailored effects to increase the participation in business ownership
of under-represented groups, such as ethnic minorities, women and
young people.
DBA 403: ENTREPRENEURSHIP

SELECTED ISSUES IN
ENTREPRENEURSHIP
 Session Objectives

• At the end of the session, students should be able to

understand:
vIntellectual Property Protection
vEthics in Entrepreneurship
vSocial Entrepreneurship
vGender and Entrepreneurship
 INTELLECTUAL
PROPERTY PROTECTION
 Intellectual Property Protection
• IP – is the property of the mind that can be
owned and has commercial value
• The most common forms of IP rights in Kenya
are trademarks, patents, industrial designs and
copyright
• Can only be protected if made into something
tangible e.g. through documentation.
 Two branches…
• Two branches of law protect intellectual
property
– Industrial property law
– Copyrights law
• Industrial Property – inventions through patents,
trademarks, industrial designs, utility models etc.
• Copyrights – relates to artistic, literary written
creations or works such as poems, novels, music,
paintings, cinematography work, photographic,
sculptures and computer programmes
 By its definition - Protection
• Prevents anyone from using the property unless
they have permission from the owner.
• Infringement – refers to violation of such rights
and can lead to prosecution by the owner.
• Examples of infringement – pirated music,
computer programmes, counterfeit products etc.
 Distinctions of IP
Trademarks Patents and utility models
Valid for 10 years Valid for - 20 & 10 years)
• The Trade Marks Act (the TM • The Industrial Property Act (IPA)
Act) defines a ‘mark’ as defines an invention as a solution to a
including ‘a distinguishing specific problem in the field of
guise, slogan, device, brand, technology and goes further to state
heading, label, ticket, name, that an invention may be, or relate to, a
signature, word, letter or product or process. In order for an
numeral or any combination invention to be patentable, it must be
thereof whether rendered in new, industrially applicable and
two-dimensional or three- involve an inventive step.
dimensional form. excluded • The requirements and procedures
from registration are relating to utility models are similar to
trademarks that are identical or those governing patents, except for the
confusingly similar to prior fact that utility models are not required
registered marks, or to well- to demonstrate an inventive step and
known marks are not subjected to substantive
examination..
 Distinctions of IP (ctd)
Industrial designs Copyrights
Valid for 5 years Duration varies – approx. 50 years
ü In order for a design to be ü The following are eligible for copyright
registrable, it must: a be new, protection: a literary, musical, artistic and
that is, it must not have been audio-visual works; sound recordings; and
disclosed to the public, broadcasts.
anywhere in the world in any ü Literary, musical and artistic works are not
way, prior to the filing date or eligible for copyright protection unless: a
sufficient effort has been expended on
where applicable, the priority
making the work to give it an original
date; not be contrary to public character; and the work has been written
order and morality; and not be down, recorded or otherwise reduced to
protected under the Copyright material form.
Act, 2001 ü Copyright accrues automatically to the
• Further, any aspects of an author upon fixation of the work into
industrial design that serve material form. Registration of the
solely to obtain a technical copyright is recommended (but not
result are excluded from mandatory) as registration is deemed to
constitute prima facie proof of ownership
industrial design protection
 Kenyan Experience
• Kenya has relatively modern intellectual property (IP)
laws and is also a signatory to various IP-related treaties.
• The Constitution of Kenya, 2010 (Articles 11, 40 and
69(1)(c)) promotes culture and protect ownership of
property (including the intellectual property) of
indigenous communities.
• Other Relevant legal instruments include:
– Industrial Property Act 2001
– Copyrights Act
– Trade Marks Act
– Trade Descriptions Act
– Weights and Measures Act
– Counterfeit Goods Act
• KIPI is a Kenyan Parastatal under the Ministry of
Industrialization, Trade and Enterprise
Development.
• The functions of the Institute are;-
1. To administer Industrial Property Rights;
2. Provision of Technological Information to the public;
3. Promoting Inventiveness in Kenya and 4. Provision of
Training on Industrial Property.
Some institutions that deal with IPP
 Necessity of IPP for Innovation
• Arguments for:
– Guarantees market for innovator
– Encourages investment in R&D
– Promotes discovery and innovation
• Arguments Against
– Innovation is a natural curiosity
– Benefits humanity – which is more important
– Open access encourages generation of new knowledge
– There exists some natural protection mechanisms:
üImitation lag
üReputational advantages
üLearning curve
 Why Low Patent Uptake in Kenya?
There has been a low uptake of patent registrations
in Kenyan according to WIPO statistics. The low
uptake of patent protection among Kenyan residents
is generally deemed to be because of:
ülow levels of innovation;
üinsufficiency of research funding and facilities in
Kenya;
üscarcity of patent agents; and
üa general perception that the patent protection
process is complex and expensive.
 GOK Interventions
The government has moved to address these
issues;-
üLegal framework review and enforcement
thereby enacting pro-innovation laws and
üEstablishing agencies such as;-
Ø National Commission for Science Technology and
Innovation for regulate and quality assurance
ØKenya National Innovation Agency, which promote
innovation,
ØNational Research Fund, which is tasked with
mobilising funds for research.
 ETHICS IN
ENTREPRENEURSHIP
 What is ethics?
• Is a discipline concerned with what is morally good
and bad, right and wrong.
• Ethics does not just apply to business
• May outline obligations and appropriate moral
actions for both the individual and the
organization
• the branch of philosophy that is concerned with
the ultimate value and standards by which human
actions can be judged right or wrong
• OR branch of philosophy that explores the nature
of of moral virtue and evaluates human actions
• …..Centre for Corporate Governance, 2012
 Legal vs. Ethical
• The law provides boundaries for defining what
activities are illegal
• It may be difficult for individuals or groups in
society to agree upon what is right and wrong
• The law defines what has to be followed
• The law, however, does not necessarily outline
what is “ethical.”
 The “Ethics Check”
1. Is it legal
2. Is it balanced/fair/win-win
3. How will it make you feel about yourself?
ü will it make you feel proud?
ü would you feel good if your decision was
published in the local newspaper?
ü would you feel good if your family knew about
it?
 Ethics within businesses
• Many businesses develop their own codes of ethics or conduct
• These codes outline what employees are to do in order to carry
out what the company sees as the “right thing to do” in various
circumstances
• Examines;-
ü Ethical Rules and principles within a Company’s Corporation
context
ü Various moral and ethical problems that can arise in a business
setting
ü Special duties or obligations that apply to persons who are
engaged in commerce
ü Key question – “is the conduct ethically right or wrong”
 Elements of Good Ethical Behaviour
• Working for the good of the Company rather than
personal benefit
• Making sure that decisions are based on good and
extensive information
• Being clear and open about conflicts of interest
• Showing standards of conduct in and outside the
Boardroom
• Direct relationship between ethical behaviour and
personality
 Code of Ethics in Businesses
• Establishes values and principles that a company uses to
inform the conduct of its activities
• Is based on the organisation’s core values. Consult
widely during development to identify and articulate
company values
• Helps staff decision making when the boundaries of right
and wrong are unclear
• Enhances corporate reputation and image
• Develops corporate culture
• Improves risk and enables crisis management
• Advances stakeholder communications
• May help to avoid litigation
 Outline for a Code of Ethics
Over all, a code of ethics should be a formal statement of a
business’s values concerning ethics and social issues. It commonly
speaks to acceptable norms of behavior, guided by six areas of
concern:
1. Honesty: to be truthful in all your endeavors; to be honest and forthright with
one another and with customers, communities, suppliers, and other
stakeholders.
2. Integrity: to say what you mean, to deliver what you promise, and to stand up
for what is right.
3. Respect: to treat others with dignity and fairness, appreciating the diversity of
the people you deal with and their uniqueness.
4. Trust: to build confidence through teamwork and open, candid
communication.
5. Responsibility: to speak up — without fear of retribution — and report
concerns in the workplace and elsewhere, including violations of laws,
regulations, and company policies.
6. Citizenship: to obey all laws of the countries where you do business and to
improve the communities where you live and work.
7. Transparency: No secret, no deceptions.
 GOK Effort
• Overtime, the government enacted various
laws geared towards eradicating graft and
improving governance in public institutions.
These legislations include:
• The Public Officer Ethics Act 2003 (POEA)
• The Anti-corruption and Economic Crimes
Act 2003
• The Public Procurement and Disposal Act
2005 among others.
 SOCIAL
ENTERPRENEURSHIP
 Characteristics – A hybrid of possibilities

Finance Goals Social Goals

Non for Social

For Profit
Profit Enterprises

Social enterprises are characterised by being a hybrid of entities

whose dual mission is the pursuit of financial sustainability in
the face of resource constraints and social purpose sustenance.
 Some Observations…
• Interest in social enterprises has received increasing,
albeit polarised, attention from scholars.
• Social enterprises can act as innovation catalysers, they
cannot guarantee social impact.
• Ramani et al., (2017) further went on to argue that long
term impact is jointly influenced by the objective and
capabilities of the social enterprise, as well as the nature
of contextual challenges at hand.
• Research on social enterprises has recently revealed an
interest in processes of resource acquisition and the
exploitation of these resources in various ways.
 Social Enterprise – Kenyan Context
• A study by British Council in 2017, estimated that there could be
around 44,000 social enterprises currently operating in Kenya. And
the sector is currently growing.
• Young leadership is a hallmark of social enterprise in Kenya:
According to the British Council Survey, 65 per cent are led by
people aged between 25 and 44 and 0.6 per cent of respondents
said that their organisations were run by people over the age of
61. This contrasts to other published data on ownership of
businesses.
• Majority of SEs stated that their mission was to create
employment opportunities thereby reflecting the commitment of
social enterprises to respond to local needs and realities among
which has a high youth unemployment rate
• Just under half of social enterprises in Kenya are female-led (44
per cent), which reflects the 48 per cent of medium-sized
enterprises (MSEs) which are female-led.
 Social Enterprises – Kenyan Context (ctd)
• One in ten social enterprises operate internationally. According to a
study undertaken by Adam Cave (2016) ‘international work
experience of key decision makers has a crucial role in the process
of internationalisation
• Social enterprises in Kenya most frequently register as a Limited
Liability Company (LLC) (23 per cent), in spite of the known
administrative and procedural complexities associated with this
type of registration, not to mention the cost implications.
• Profitability is often seen as a mark of the sustainability of the
social enterprise (Panum and Hansen, 2014). What is the impact of
this on Social Goals?
• Access to capital is the main obstacle constraining growth among
social enterprises surveyed. A second, less significant challenge is
access to grant funding, followed by technical skills
•
 GENDER AND
ENTREPRENEURSHIP
 Why Gender in Entrepreneurship?
• In Africa, women form the bulk of informal enterprises and are
mostly driven into that form of enterprise by necessity.
• 47.9 percent of formal enterprises were owned by men
compared to 32.2 percent by women. On the other hand, more
than 60 percent of the informal enterprises were women-
owned and are largely unsustainable entrepreneurial activity
(KNBS, 2016).
• These statistics are similar throughout Africa as argued by (Campos
& Gassier, 2017) and across the world (Cabrera & Mauricio, 2017;
Global Entrepreneurship Monitor (GEM), 2017).
• Female participation in entrepreneurial activities is
comparatively higher in Sub-Saharan Africa than in any other
region and women-owned businesses significantly underperform
those owned by men (OECD/European Union, 2017; Campos
& Gassier, 2017).
 False Conceptualisation?
• For a long time, it was argued that the traits that
were used to describe entrepreneurs, for instance,
self-centered, internal locus of control, self-
efficacious, mentally free, able to withstand
opposition, strong personality, resolute, firm in
temper were the same traits or temperaments that
were stereotyped to describe masculinity (Ahl, 2006;
Marchant, 2018).
• The misconception therefore was that feminine traits
were hardly entrepreneurial... a view that has since
caused the emergence of discourse in women
entrepreneurship.
 The Current State of Women
Entrepreneurship
• It is estimated that the economic losses caused by gender
discrimination in Africa and the Middle East alone amount to over
US$900 billion (Froham, 2018).
• Considering the fact that gender inequalities and discrimination
persists in all parts of the world, globalization could affect women
more negatively than men. On the flip side, globalization could
indeed lead to greater gender equality if accompanied by the right
public policy. (World Development Report, 2012).
• Seventy percent (70%) of the informal traders in Africa are
women (Froham, 2018) and therefore this calls for enhanced
support to these business regimes as opposed to the
traditional stereotype of eliminating informal businesses. Women
businesses are predisposed to be informal in nature due to their
adverse operating environments and accompanying stereotypes
that limit their formalisation (African Union Commission, 2018).
Challenges affecting Women Entrepreneurs
• Differences in education across genders have limited women’s
access to exports and new technological opportunities. These
challenges are more pronounced in countries that have generally
lower incomes and where there are socio-cultural limitations that
affected the enrolment of education to females (Vossenberg,
2013; Osoro, Nyamongo, & Areba, 2013).
• Due to institutional and market failures, female farmers and
entrepreneurs across the African countries have less access to
land for production and use of credit than their male counterpart.
Commensurately, women’s weaker property rights in land and
limited access to productive inputs also constrain their capacity
to benefit from trade exports as in the case of horticultural
exports in Senegal and Kenya (World Bank, 2012).
• Cultural stereotyping exists, and information that comes by way
of globalization will need to overcome the cultural hurdles
affecting women entrepreneurs.
 Kenya Government Interventions
• There has been a concerted effort to empower women
in a myriad of ways more broadly in Kenya which is
reflected in the social enterprise ecosystem.
• Some of these initiatives include:
§ State intervention through constitutional reform
§ Setting the target of eliminating the gender gap by
2030 (Vision 2030) and
§ the creation of funds specifically targeting women
(such as Women’s Enterprise Fund and Uwezo
Fund).
NEXT STEPS
END.