By Peter Mwibanda
Date: September 27, 2025
NAIROBI
Small and Medium Enterprises (SMEs) are the heartbeat of Kenya’s economy — driving innovation, creating jobs and powering growth from the ground up.
Yet despite their undeniable impact, these enterprises continue to struggle under the weight of policy neglect, limited access to credit, over-regulation and political lip service.
As the government touts its “hustler economy” mantra, micro, small and medium enterprises (MSMEs) say they’re still waiting for the kind of political goodwill and institutional support that can transform slogans into sustainability.
The Backbone of the Economy
MSMEs in Kenya are not fringe actors. They account for over 90% of all businesses, employ over 80% of the working population, and contribute about 33% of the GDP, according to the Kenya National Bureau of Statistics (KNBS).
These enterprises operate in nearly every sector of the economy, with heavy concentration in:
Wholesale and Retail Trade – from dukas and informal kiosks to small supply chains.
Manufacturing – especially in the Jua Kali sector, textiles, agro-processing, and furniture.
Food Services including local eateries, street vendors and small restaurants powering the daily hustle of millions.
Yet despite their widespread presence and resilience, these businesses often operate in a hostile environment — battered by inconsistent regulations, punitive taxation, delayed payments from government agencies and poor infrastructure.
What SMEs Are Saying
“There’s no lack of ideas, customers, or energy,” says Miriam Wanjiku, who runs a small tailoring shop in Gikomba. “But we’re taxed like big businesses, ignored like we don’t matter and left to fend for ourselves when things get tough.”
Others echo the same frustration: high cost of credit, lack of market access, and minimal state support during crises like COVID-19 or drought-induced inflation.
A 2024 survey by the Kenya Private Sector Alliance (KEPSA) found that more than 70% of MSMEs shut down within their first three years, not due to poor business models — but because of an unfriendly policy environment.
Where Is the Political Will?
While political leaders often praise the “hustler spirit,” actual policy interventions remain shallow or poorly executed.
Initiatives like the Hustler Fund have been criticized for offering small, short-term loans with unclear repayment structures and failing to address deeper structural issues like land rights, licensing bottlenecks and protection from cartels.
“What SMEs need is not handouts — they need a clear roadmap, proper legal protections, and targeted investment,” said economist David Ochieng. “Without real political goodwill, these businesses will continue to tread water while politicians campaign on their backs.”
What Political Support Could Look Like
If Kenya is serious about empowering SMEs, experts suggest several key areas where political commitment must be felt:
Tax Reforms: A simplified and fair taxation regime that allows small businesses to grow without punitive levies.
Access to Affordable Credit: Strengthen credit guarantee schemes, encourage fintech lending, and reduce interest rates for MSMEs.
Ease of Doing Business: Streamline licensing and regulation at county and national levels to reduce red tape.
Public Procurement Opportunities: Ensure a fair percentage of government contracts go to registered MSMEs, especially youth- and women-led ventures.
Infrastructure Investment: Roads, electricity, digital access and markets remain essential enablers for rural and urban SMEs alike.
Counties Hold the Key Too
With devolution, counties have a unique opportunity to nurture local entrepreneurship ecosystems.
Yet many county governments have failed to implement coherent SME policies or budget allocations.
“Counties must move from merely collecting licenses to supporting incubation hubs, training, and infrastructure,” says Susan Muli, a business mentor based in Machakos. “That’s where real impact happens.”
A Call to Action
Kenya’s SMEs are not asking for favors — they are demanding fairness, access, and partnership. They are the informal sector that has become formal through sheer resilience.
They are the real engine of job creation, innovation, and inclusive growth but for them to truly thrive, political leaders must move beyond rhetoric and into action.
The next chapter of Kenya’s economic story will not be written in boardrooms — it will be written in markets, backstreets, farms and digital platforms across the country.
It is time policymakers took note.
