Standard Business

We need to build a resilient MSME sector to create jobs

MSMEs have continued to face uncertainty due to the adverse effects of Covid-19. [Courtesy]

The world is today commemorating the United Nations’ Micro, Small and Medium Enterprises (MSMEs) Day to celebrate the contribution of small enterprises to sustainable development and the global economy.

MSMEs are vital in achieving the Sustainable Development Goals (SDGs), particularly SDG Eight on decent work and economic growth and SDG Nine on industry, innovation and infrastructure.

The International Council for Small Business indicates that globally, formal and informal MSMEs makeup over 90 per cent of all firms and account for 70 per cent of total employment and 50 per cent of gross domestic product.

In Kenya, MSMEs are the engines of growth and play a key role in the country’s economic development. The sector contributes about 80 per cent of employment and is crucial in reducing poverty, stimulating entrepreneurship and promoting innovation for achieving the SDGs.

Over the last two years, MSMEs have continued to face uncertainty due to the adverse effects of Covid-19 on economies globally. The recession emanating from Covid-19 has taken a substantial toll on small businesses, including closures, cash flow and working capital erosion, disruption of supply chains, loss in incomes and shift in customer preferences.

The SME Competitiveness Outlook 2020 by International Trade Centre reveals that in Africa, two out of three businesses were strongly affected by Covid-19, mostly involving reduced sales (75 per cent) and difficulty accessing inputs (54 per cent).

MSMEs have adopted mechanisms to combat the pandemic, including cost-cutting measures, diversifying their business models and adopting timely innovations in response to the changing market dynamics.

During lockdowns, many economies shifted onto digital platforms. Teleconferencing, online shopping and digital payments have now been adopted in many regions since the second half of 2020. The shift to digitisation is expected to support economic resurgence after the pandemic and can play a crucial role in improving MSMEs’ resilience.

Because of their key role in job creation and growth, protecting and enabling small enterprises during this period of economic turbulence will be crucial for economic stability.

The State in 2020 put in place stimulus policies and programmes supporting MSME resilience that included tax breaks, seed fund through a credit guarantee scheme, payment of pending bills and debt moratorium programmes. During this year’s budget, Treasury allocated an additional Sh2 billion for the Credit Guarantee Scheme for SMEs. This will be on top of the Sh10 billion was allocated in the 2020-21 financial year.

The financial sector has played a crucial role in stabilising the operations of MSMEs. Last year, NCBA supported disbursed over Sh432 billion in digital loans to small enterprises and individuals to manage their day-to-day needs and working capital.

The bank also granted loan moratoriums and restructured credit worth Sh78 billion to corporate and retail customers. While the pandemic has exposed fragilities in the MSME sector, it has also underscored the urgent need for a coherent policy response to build a resilient sector.

We can help small businesses ride out crises, reduce their risk of bankruptcy and cushion the economy.

– The writer is NCBA Group Director, Retail Banking. 


Monitor water pumps remotely via your phone

Tracking and monitoring motor vehicles is not new to Kenyans. Competition to install affordable tracking devices is fierce but essential for fleet managers who receive reports online and track vehicles from the comfort of their desk.

Source link

Related posts

Bar owners worried about business future

Kenyan Review

Uncertain future for Telkom after Airtel merger collapse : The Standard

Kenyan Review

Regional coffee agencies want tariffs removed to boost trade

Kenyan Review
%d bloggers like this: