Entrepreneurship Policies through a Gender Lens

Kenya

By Anne W. Kamau, University of Nairobi

Winnie V. Mitullah, University of Nairobi

Background

In Kenya, the informal economy employs approximately 80% of the workforce and is a key contributor to job creation (Okungu and McIntyre, 2019). The sector includes micro and small enterprises (MSEs). Recognising the role that the informal sector plays in Kenya’s economic growth since the mid-1960s, the government has introduced policies to support the MSEs’ growth and development (KNBS, 2016). Lead policies include:

• Sessional Paper No. 1 of 1986 on Economic Management for Renewed Growth which emphasised the role of the informal sector in job creation and provided policy directions for credit provision, import substitution and promoting local industries, as well as the formation of an inter-ministerial small-scale enterprise unit and taskforce to review informal sector policies (King, 1986);

• Sessional Paper No. 2 of 1992 on Small Enterprises and Jua Kali; and

• Sessional Paper No. 2 of 2005 on Development of Micro and Small Enterprises (SMEs) for Wealth and Employment Creation for Poverty Reduction which emphasised the importance of SMEs in job creation.

These policies have shaped Kenya’s economic path with an emphasis on SMEs. This resulted in the enactment of the Micro and Small Enterprises (MSE) Act No. 55 of 2012, the first comprehensive MSE law in Kenya. The Act established the MSE Authority with the mandate of supporting the development of new enterprises, improving access to capital, and strengthening the co-ordination and technological advancement of MSEs. The authority also provides for women’s representation in its main governance body, thus promoting gender mainstreaming in all MSE activities and programmes.

Policy issue: Access to social protection

Kenya has many policies supporting MSEs. However, policies have deficits in addressing social protection. This undermines the performance of all enterprises, however, the lack of social protection disproportionately affects women entrepreneurs who constitute 48% of MSEs and the largest proportion of vulnerable informal sector workers (Rockfeller, 2013). Whereas Kenya’s social protection policy seeks to extend social security to all workers and their dependents (ROK, 2011), most informal sector workers remain outside of social protection coverage (OECD, 2017). The limited social protection provision among these workers is attributed to the voluntary nature of Kenya’s social protection programmes for the informal employed workers, inadequate programme funding, high cost of premiums, low awareness about social protection schemes, and non-consolidated payment mechanisms (ILO, 2019). Regulations determining enrolment and eligibility to access benefits, as well as restrictive contribution payment options further limit women’s participation in the programmes. The lack of social security coverage affects informal sector workers’ ability to invest in business expansion and growth because saved incomes and profits are often used to respond to shocks. Likewise, women are often forced to divert their meagre incomes to the care economy. Their businesses are further undermined when they cannot operate because of undertaking household and caring roles.

The Kenya government has made efforts to promote women’s access to business finances. An example is the Women Enterprise Fund which was enacted into law in 2019 as the consolidated Uwezo Fund (RoK, 2019). The Uwezo Fund1 enables women, youth and persons with disability to access finance to promote businesses and enterprises, and to take advantage of the 30% government procurement provision. Similarly, private formal agencies, including microfinance institutions, savings and credit co-operatives (SACCOs) and mobile money services provide loans to enhance women’s financial inclusion in business (Finaccess, 2019). However, these efforts do not include social protection. Hence, women entrepreneurs cannot take full advantage of the funding sources for investments because they often use the loans to address immediate needs and shocks rather than investing in business growth.

Many women remain in the informal economy due to conflicting financial, time and family demands. They have competing demands that require them to provide for their families, including meeting the health and education needs of their children (Kamau et al., 2018). Hence, they make small inaugural investments in their businesses. Providing social protection coverage to informal sector workers can cushion women from social and economic shocks and poverty (Barrientos, 2010).

Conclusions and recommendations

Current social protection policies do not adequately cushion a large number of women entrepreneurs from shocks. A significant number of women entrepreneurs operate in the informal sector. Most women rely on informal saving mechanisms to support their social security and welfare needs (Kamau et al., 2018). It is important for the Government of Kenya to address social and economic policies that hinder women’s enterprise growth, and to enhance provision of adequate social protection measures.

Recommendations for Kenya

• Provide support for child care, business skills and capital for business development to improve the low and slow growth of women-owned businesses.

• Ensure social protection for women entrepreneurs to cushion their businesses from economic shocks and stress.

• Address policy and institutional barriers impacting women entrepreneurs’ access to existing social protection programmes and benefits.

References

Barrientos, A. (2010), “Social protection and poverty: Poverty reduction and policy regimes”, Thematic Paper, Social Policy and Development, No. 42, United Nations Research Institute for Social Development (NRISD), Geneva.

Finaccess, (2019). Finaccess Household Survey: Access, Usage, Quality, Impact. Central Bank of Kenya, Kenya National Bureau of Statistics and FSD Kenya, Nairobi, https://www.centralbank.go.ke/wp-content/uploads/2019/04/2019-FinAcces-Report.pdf.

ILO (2019), A quantum leap for gender equality: For a better future of work for all. International Labour Organisation, Geneva.

Kamau A, P. Kamau, D. Muia, H. Baiya and J. Ndung’u (2018), “Bridging entrepreneurial gender gap through social protection among women small scale traders in Kenya” in S. Yousafzai, A. Fayolle, A. Lindgreen, C. Henry, S. Saeed and S. Sheikh (eds.), Women’s Entrepreneurship and the Myth of Underperformance, Edward Elgar Publishing, Cheltenham.

King, K. (1986), “An evaluation of research and policies on informal sector employment in developing countries”, PHREE Background Paper Series, Education and Employment Division Population and Human Resources Department of the World Bank.

KNBS (2016), “Micro, Small and Medium Establishment (MSME) Survey: Basic Report”, Kenya National Bureau of Statistics, Nairobi.

OECD (2017), Social Protection in East Africa: Harnessing the Future, OECD Publishing, Paris, https://doi.org/10.1787/9789264274228-en.

Okungu V., and D. McIntyre (2019), “Does the informal sector in Kenya have financial potential to sustainably prepay for health care? Implications for financing universal health coverage in low-income settings” Health Systems & Reform, Vol. 5, No. 2, pp. 145–157, doi: 10.1080/23288604.2019.1583492.

Rockfeller Foundation (2013), “Health vulnerabilities of informal workers”, Rockfeller Foundation, https://www.rockefellerfoundation.org/report/health-vulnerabilities-of-informal-workers/.

ROK (2019), The Kenya Uwezo Fund Bill, 2019, Kenya Gazette Supplement National Assembly Bills, Government Printer, Nairobi, http://kenyalaw.org/kl/fileadmin/pdfdownloads/bills/2019/KenyaUwezoFundBill2019.PDF.

ROK (2011), Kenya National Social Protection Policy, Republic of Kenya, Ministry of Gender, Children and Social Development, Nairobi.