The Kenyan government is preparing to roll out a revamped Micro, Small, and Medium Enterprises (MSMEs) policy aimed at transforming the sector into a cornerstone of jobs, economic growth, and inclusive development under the Bottom-Up Economic Transformation Agenda (BETA).
Principal Secretary for MSMEs, Susan Mang’eni, highlighted the progress made under the current administration and outlined key reforms designed to tackle long-standing challenges such as informality, stunted growth, harassment of traders, and high operational costs.
“The MSMEs programme was established because we recognised the contribution that MSMEs make to our economy, contributing about 40 per cent to GDP and accounting for nearly 90 per cent of businesses in Kenya,” Mang’eni said.
Despite their prevalence, many MSMEs have remained small and informal, creating what the PS described as a “missing middle” in the economy. The new policy, now awaiting Cabinet approval, aims to prioritise formalisation, improved regulation, and increased access to opportunities for growth.
Ending Harassment and Organising Informal Work
A central component of the reforms is addressing what Mang’eni called the “criminalisation of work.” Informal workers, including market traders and boda boda operators, have often been treated as disorganised, despite providing critical livelihoods.
“These are very important jobs in our country. This work gives opportunities to many Kenyans to earn a living, pay rent, send their children to school, and sustain their families,” she said.
The State Department has collaborated with county governments to designate trading spaces and establish operating schedules that balance order with economic opportunity. Mang’eni noted that this partnership has significantly reduced clashes between local authorities and traders.
Simplifying Registration and Fueling Growth
The policy also introduces reforms to ease business registration and formalisation. Previously, 30 enterprises were required to form a registered cluster; this has now been reduced to five, enabling small businesses to organise more effectively.
“That was a major milestone. It has helped us organise artisans and suppliers who are now able to open bank accounts, access credit, and compete for contracts things that were very difficult before,” said Mang’eni.
Over the past three years, more than 2.5 million enterprises have been registered under these reforms, boosting their visibility and market access.
“Formalisation helps financial institutions understand what you do, making it easier to get loans and grow your business,” Mang’eni explained.
Recognition of Prior Learning
The revised MSME framework also emphasises the Recognition of Prior Learning (RPL), enabling informal workers to certify their skills through institutions such as TVETs and the National Industrial Training Authority (NITA).
“Many skilled artisans could not work in certain sectors because they lacked certification. Now, through RPL, we assess their skills and award certificates that open doors to bigger opportunities,” she said.
Through the National Youth Opportunities Towards Advancement (NYOTA) programme, the government plans to support at least 20,000 young people with skill certification via RPL, with backing from development partners including the World Bank.
Looking Ahead
Mang’eni said the updated MSME policy represents a shift from survival-focused micro-enterprises to growth-oriented, competitive businesses capable of creating sustainable jobs and absorbing Kenya’s growing youth population.
“Our goal is to build an MSME sector that grows, formalises, and creates jobs. We have made significant progress, but we will continue working with partners at all levels to ensure that every Kenyan with an entrepreneurial spirit has the opportunity to succeed,” she concluded.
