According to the World Bank, Kenya’s unemployment rate dropped to an all-time low of 9.3 % in Dec 2019. This is a great development given that the Country has been going through much economic strain, especially for the Micro, Medium and Small Enterprises (MMSEs), who are a huge source of employment in this East African Economic frontrunner.
In order for this Country to further cut down on the employment rate, I recommend four things that can help our MSMEs to not only survive but to thrive and by extension absorb a huge number of our unemployed population.
1. Offer a three years’ Tax Holiday for Startups
This could be on condition that startups keep books of accounts. They can also be given a condition to employ at least 5 Kenyans and above within a given time frame. It is happening in other countries, like India, where the Government extended the period of exemptions from other regulatory filings for up to 10 years instead of five.
2. Waiver 50% of licensing fees for all Startups
Both the Central and county governments should consider waiving 50% of licensing fees for all startups or SMEs. The Government can also purpose to keep away county harassment and develop ways on how to report officials who extort business owners.
3. Special Startup Loans
The Kenyan Government in 2019 was already on the right track by establishing Stawi – A mobile loan product that will allow MSMEs to access unsecured credit of between Ksh 30, 000 and Ksh250, 000 at an interest rate of 9% per annum. The Government should further enhance this by having a special startup loan facility with much higher margins and that finances ideas. The only qualification to this facility should be a Local Purchasing Order (LPO) that does not seek for conventional security.
4. Tax Refunds to Businesses
The enforcement of the Statute Law (Miscellaneous Amendment) Bill, 2019, which allows businesses to use excess Value Added Tax (VAT) withholding tax to the taxman to offset any tax liability, including Pay As You Earn (PAYE), corporate tax, excise and customs duty is a welcome move that should be enforced religiously.
George Wachiuri: A Leading Entrepreneur, a Published Author, Philanthropist, Youth Empowerment Enthusiast, a Family man and CEO of Optiven Group
Contact Optiven Group: 0790 300 300