EDITORIAL: Good policies needed to ensure SMEs survival

A new survey has highlighted a number of hurdles standing in the way of progress of small firms, with poor policies cited as the main impediment.

The Kenya Medium Small and Micro Enterprises (MSMSE) Policy Index 2019 by the Kenya Private Sector Alliance (Kepsa) notes that unresponsive policies are the main reason startups stagnate or even collapse a few years after being established.

The reason the policies remain out of touch with the needs of small businesses is that their owners are not anywhere near the table when such policies are crafted.

Without their participation and input, it is not possible to fashion enabling policies that can provide a sound foundation for their expansion and takeoff.

Yet policy environment is far from being the only challenge that hurts SMEs’ prospects. Implementation of already existing policies is also wanting.

In 2013, the government launched the Access to Government Procurement Opportunities programme. Under the plan, youth, women and the disabled were allocated 30 percent of public tenders. While this is an ingenious idea aimed at boosting startups, it has generally been bungled in its implementation with some State agencies failing to meet the allocation. And when these group of entrepreneurs get the tenders, payments by the government take a long time after the services have been rendered, putting their operations in jeopardy.

Some have been forced to shut down after spending almost all their resources in servicing the tenders.

The failure of the tender programme to live up to the expectations demonstrates that that while good policies and creative ideas are the way to go, they are far from being enough. How they are implemented matters a great deal since they determine their success or failure.

For SMEs to thrive, the State and the private sector have to work together. More fundamentally, owners of these businesses have to play a central role in coming up with policies that affect them. They also need adequate funding, guidance, mentorship and be equipped with such critical skills as marketing and financial management. Helping them to develop market linkages, especially for exports is well help scale and be key cog in the national economic wheel.