State Department Embarks on Inclusive Public Participation to Shape Transformative MSME Policy 2025
The state department for MSMEs is conducting a nationwide public participation exercise to gather input on the draft Micro, Small, and Medium Enterprises (MSME) Policy 2025 and Micro and Small Enterprises (MSE) Act of 2012. This marks a pivotal step toward refining the legal and policy framework that governs Kenya’s MSME sector, a backbone of the national economy.
Presiding over public participation for the western region in Busia County, Principal Secretary Susan Mang’eni emphasized that the policy review is a crucial move towards removing systemic barriers that hinder business growth and innovation. The policy is expected to improve access to finance, ease regulatory burdens, boost market access, upgrade infrastructure, and cultivate a vibrant ecosystem for MSMEs.
“The establishment of a dedicated State Department for MSMEs underlines the government’s unwavering commitment to this sector” PS Susan Mangeni.
The policy, once enacted, will serve as a strategic roadmap to enhance productivity, diversification, and competitiveness within the MSME ecosystem by creating an enabling environment that fosters economic transformation and social empowerment for millions of Kenyans.
Despite previous interventions like the Hustler Fund, digital transformation programs, and industrial hubs, the MSME sector continues to face critical challenges. These include limited access to credit, inadequate infrastructure, informality, fragmented policy implementation, lack of business skills, and vulnerability to shocks such as pandemics and climate events.
The MSME Policy 2025 addresses these concerns through targeted strategies that integrate climate resilience, digital readiness, formalization, and ecosystem strengthening for startups and scale-ups. It aligns with the Fourth Medium-Term Plan (2023–2027) under Vision 2030 and reflects Kenya’s commitment to inclusive, sustainable economic growth.
Additionally, Some of key objectives of the draft MSME Policy 2025 include: Strengthening institutional and regulatory frameworks, streamlining compliance processes; enhancing access to finance, technology, and markets; Promoting innovation and competitiveness; Fostering inclusivity for women, youth, PWDs, and marginalized groups.
"Inclusivity is at the heart of this policy. We are committed to supporting women, youth, persons with disabilities (PWDs), and marginalized communities through targeted interventions that address their unique challenges," PS Mangeni emphasized.
Proposed amendments to the Micro and Small Enterprises (MSE) Act of 2012 include integrating a value chain approach, establishing an intergovernmental working group to enhance devolved governance, and formally recognizing medium enterprises completing the micro-to-medium transition that was previously missing in law.
Participants raised additional issues, such as the need for the policy to reflect inclusive language and challenge misconceptions that those in the informal sector are unskilled or undereducated.
With Kenya's youth entering the labour market in large numbers, stakeholders emphasized the need for the policy to empower young people to become job creators and leverage technology to advance MSME development.
The policy draws from global best practices like India’s credit guarantee models, Colombia’s formalization programs, and Ethiopia’s infrastructure leasing initiatives all of which inform Kenya’s efforts in boosting financing, regulatory simplification, and MSME infrastructure.
The development of the policy was informed by rigorous stakeholder engagement, including consultations with MSME associations, private sector actors, policymakers, and development partners across the country.