Micro Small Associations: Channel for Government MSE Covid-19 intervention

The comprehensive intervention by the Kenyan government towards alleviating the economic shock of Covid-19 are commendable and should be viewed as the first of many as it seeks innovative ways of easing cashflow to businesses especially SMEs.

One thing that we must realize Is that MSMEs in Kenya are quite unique hence even though commendable; the blanket stimulus package may not be felt by 79% of unlicensed SMEs who according to the Kenya National Bureau of Statistics are 5.85 million compared to a total MSME population of 7.41 million. These unlicensed SMEs most likely don’t have financial systems to enable then be tax compliance hence the tax incentives of reduced turnover tax, PAYE and VAT may not have a significant impact to their trade.

The question then becomes how can they be reached given that these Jua Kali traders are at the frontline in terms of the full brunt of the negative effects of covid-19 pandemic which include closure of markets, change in customer behavior in light of quarantine and acute capital shortage due to the balancing act of domestic use and  business reinvestment.

Government interventions towards MSEs must borrow from marketing principles of segmentation of target market that is homogeneous in terms of needs.

In this instance based on our own research majority of MSEs are found in different physical clusters such as Kariokor Market, Mlango Kubwa, Jericho Market,Kongoea and Marikiti among others. MSEs in these clusters most often than not are members of either registered or unregistered associations or Chama groups that acts as a platform for; savings, risk management (form of insurance through savings), information sharing, mentorship, training, social protection among others.

Government intervention can target these groups with cash transfers after conducting a rapid audit of these groups that exist across the country. The audit will entail working in collaboration with institutions that have database of these MSEs through chama groups and or associations such as social services, ministry of trade industry and cooperatives, Micro Small Enterprise Authority, Youth Enterprise fund, NGOs, religious institutions, as well as financial institutions among other entities that can act as channels of verifying these groups as well as disbursement.

The cash transfer can act as an immediate relief for these MSEs who can use it to purchase stock, change business model by investing in technology and delivery, negotiate for new premises to store products outside traditional markets as they try to deal with the pandemic as well as adjust their business model and adapt to a new normal.