Small businesses contributing more to Kenya’s GDP that agriculture

Last year, Small traders in Kenya contributed up to Sh3.37 trillion out of the country’s total of Sh9.97, accounting for a whopping 34 percent to the country’s Gross Domestic Product (GDP).

This made the sector the biggest contributor, edging out traditional economy drivers like tourism, agriculture and manufacturing.

In a report launched yesterday by the Kenya National Bureau of Statistics (KNBS), the country’s GDP expanded by 0.3 per cent to 5.6 compared to 5.3 per cent the previous year.

The Micro Small Medium sector, whose value has not been well captured in the past because of lack of credible data until the latest survey supported by the World Bank, has emerged tops. The last comprehensive survey on the sector was conducted in 1999.

In terms of gross value added, the sector is estimated to have contributed Sh1.78 trillion, representing 31.39 per cent of the country’s gross value that stood at Sh5.67 trillion.

Manufacturing ranked highest by contributing 24.3 per cent of the MSMEs’ gross value added. Wholesale and retail trade, transport and storage, and education services also ranked high by contributing 22.8 per cent, 15.4 per cent and 7.3 per cent to the gross value added.

The survey further shows that small traders made a gross turnover of Sh784.2 billion in the month prior to the survey, out of which licensed businesses generated Sh706 billion while unlicensed businesses sold goods and services worth Sh78.2 billion.

The 2016 survey established that there were about 1.6 million MSMEs licensed by county governments while the unlicensed businesses were around 5.9 million.

According to the survey, a large proportion of licensed (62 per cent) and unlicensed (46.2 per cent) businesses indicated they did not require a loan.

The results shows that cost of credit and lack of adequate collateral are hindrances to uptake of loans for majority of businesses that need credit. The proportion of MSMEs that reported that loans were too expensive was 12.3 per cent for the licensed and 16 per cent for the unlicensed.

This survey will perhaps trigger the government to come up with elaborate policy framework to nurture this sector that accounts for at least 65 per cent of new jobs in the market.

It is also expected to change lenders’ view of small scale business operators who are normally locked out of credit bracket, with most financial institutions terming them high risk.

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