THE ROLE OF SMEs IN THE MANUFACTURING SECTOR

Manufacturing is a key sector in the development of many economies worldwide. Some of the major sectors in Kenya include agriculture, energy, tourism and manufacturing. These sectors in Kenya have not only contributed to the country’s major exports but have also created millions of jobs for many people.
According to the KAM Manufacturing Report in 2018, the manufacturing sector in Kenya has faced significant challenges in the past 15 years. The report further states that despite the static nature of the manufacturing sector with regards to its overall role in the economy, there have been significant shifts in the production levels of various manufacturing sub-sectors over the last ten years alone.
A lot has been done to develop a manufacturing-led economy aimed at creating jobs for many and wealth for the country. SMEs are seen to be a critical point when it comes to achieving manufacturing prosperity in the country. A recent National Economic Survey report by the Central Bank of Kenya (CBK) indicates that SMEs constitute 98 percent of all business in Kenya, create 30 percent of the jobs annually as well as contribute 3 percent of the GDP. This means that for the manufacturing sector to grow, a lot more emphasis must be put on SMEs.
There are some manufacturing companies that are make some good strides in the economy. A good example is Tarpo Industries who have been involved in this industry for over 20 years. Since the first case of COVID-19 in Kenya was announced in mid-March Tarpo Industries has been offering expertise in rapid deployment of emergency response field hospitals. A lot of procurement departments of private hospitals have reached out to Tarpo for tents to deal with the emergency.
Another company in the sector that is doing very well is Ishida. Ishida opened their regional office in Kenya in September 2019. According to the company’s president Mr Ishida, Kenya’s manufacturing sector has shown great interest in new and advanced technology. The food industry in Kenya has grown tremendously with a lot of demand for exports. Ishida’s move to venture into the Kenyan market has ensured the continued growth of strong trade and investment ties between the UK and Kenya. Their cost-effective weighing, packing and inspective solutions have enable the company to provide a fast-response service in the supply and support of individual machines.
SMEs need a lot of financial support to thrive. They also have limited access to credit with tough lending conditions given to them such as collateral for loan. The private sector has been very adamant at supporting SMEs. Companies such as Safaricom have SME programmes in place aimed at supporting these companies. For this sector to thrive fully, proper policies and plans must be developed by the National and County governments.