Economic survey 2019: Time for MSME focus

The Kenya Bureau of statistics launched the economic survey 2019 yesterday with the following notable results: Real Gross Domestic Product (GDP) is estimated to have expanded by 6.3 per cent in 2018 compared to 4.9 per cent in 2017.

The growth was attributable to increased agricultural production, accelerated manufacturing activities, sustained growth in transportation and vibrant service sector activities.

The report further indicates that the economy created 840.6 thousand new jobs in 2018. The informal sector, which accounted for 83.6 per cent of the total employment created 762.1 thousand new jobs in the period under review. The number of persons engaged, excluding those in rural small scale agriculture and pastoralist activities rose by 5.0 per cent to 17.8 million persons in 2018.

The economic impact of MSMEs in Kenya a majority of which are classified under the informal sector once again has been validated in this instance in terms of contribution towards employment creation of 762.1 thousand out of 840.6 thousand accounting for 83.6 percent. This is in addition to MSMEs contributing over 3 percent of the 6.3 per cent GDP growth.

There is an old management principle that says; what doesn’t get measured doesn’t get done. Despite the significant contribution to the economy the report doesn’t isolate MSMEs as a special sector that needs urgent attention in terms of distilling sector drivers similar to the way other sectors such as agriculture has been done in the form of rain and energy international oil prices and rain as well.

MSMEs are either lumped under private sector or under broader economic value chains of manufacturing, service, agriculture, tourism and construction among others.

Further the report cites performance of the Nairobi securities exchange as a yardstick or barometer of the performance of the economy with statistics such as The NSE 20-Share index dropping by 23.7 per cent to 2,834 points in December 2018, with the market’s capitalization standing at KSh 2,102 billion in December 2018.

The question that begs is for a sector that creates over 80 per cent of new jobs and contributes over 30% of GPD,Is there no national MSME index that can be used as a fair barometer of economic performance ?

While reporting how the NSE 20-share index is fair; Kenya for instance posted an impressive 136 percent year-on-year growth in tech start-up funding in 2018 to net Sh34.8 billion ($348m). Startups being a subset of MSMEs in Kenya for instance are not factored and such foreign direct investment that doesn’t come through the NSE run the risk of being classified as Diaspora remittance hence miss out on budgetary support .

MSMEs being a major economic player need special attention in terms of identification of key drivers consistent measuring and evaluation through the national economic survey