State Department Rolls Out Public Participation Exercises on the Draft MSME Policy 2025 and the Proposed Amendments on the MSE ACT

The State Department for Micro, Small and Medium Enterprises (MSMEs) Development has officially launched public participation for the draft MSME Policy 2025 and proposed amendments to the MSME Act 2025 in Nairobi.

The validation and public engagement exercise marks a critical step toward refining the policy and legal framework that governs the MSME sector. By incorporating diverse perspectives, the process aims to create a more inclusive, robust, and responsive policy that meets the needs of stakeholders across the country.

Once enacted, the MSME Policy 2025 will serve as a strategic roadmap for strengthening a productive, diversified, and competitive MSME sector that fosters economic transformation and social empowerment.

Speaking during the roll-out, PS Mangeni outlined key objectives of the draft policy, including strengthening the institutional and regulatory frameworks, streamlining regulatory processes, and enhancing access to finance, markets, and technology. The policy also aims to promote innovation, build capacity, and improve MSME competitiveness to expand their access to domestic, regional, and international markets.

"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.

Kenya’s MSMEs are a cornerstone of the national economy, accounting for over 90% of all businesses, contributing approximately 30% to the GDP, and employing more than 15 million people. They are vital engines of innovation, employment, and resilience, yet they face persistent challenges, including limited access to affordable credit, weak market linkages, and capacity gaps.

During the engagement, khamati Mugala, Head of International Labor Organization (ILO),  East Africa Tanzania, Rwanda, and Burundi  emphasized the need to shift focus from quality to improve productivity and reduce underconsumptionMSME products. The Micro and Small Enterprises Authority (MSEA) chairperson also underscored the importance of formalizing informal enterprises to reduce the stigmatization of certain types of work and improve business sustainability.

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. “These individuals have mastered practical skills, which are equally valuable to our economy,” noted one stakeholder.

With Kenya's youth entering the labor 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.

Some proposed amendments to the MSE Act of 2012 include the Integrating government priorities, including value chain approach and cluster development, Integrating devolved governance structure through the establishment of an intergovernmental working group and the inclusion of medium enterprise to complete the transition cycle from micro to small to medium, which was missing in MSE Act 2012.

The public participation exercise is expected to continue across various counties, ensuring voices from all corners of the country shape the future of Kenya’s MSME sector.