Pay small traders to alleviate their misery

Small-scale and microenterprises have been billed as the next frontier for growth.

That the country’s future depends on the bulging small-scale businesses, which generate billions for the economy and create 30 per cent of the jobs every year.

However, the reality on the ground is different. A majority of the small and medium enterprises (SMEs) are fighting for survival as the rumbles of economics take a toll on them. Most of the businesses are collapsing at a worryingly rapid speed.

According to experts, the main causes for the quick death of SMEs are: inadequate capital, limited market, poor infrastructure and supportive business ecosystem, lack of knowledge and relevant skills and a prohibitive regulatory environment.

Indeed, economists estimate that 46 per cent of SMEs fold after the first year, another 15 per cent in the second and just a few survive to the fifth.

Those are damning statistics and a real challenge to economists, planners and decision-makers.

However, things have been getting worse in recent times because of the changed socio-economic and political landscape.

With the advent of devolution, many people migrated to the grassroots to set up business with the hope of securing contracts from county governments.

For a while, this worked and many upstarts thrived by doing business with counties. Now, things have taken a turn for the worse, especially for the upcountry-based businesses.

After entering into a contract with SMEs to offer services and goods and through that help them grow, counties have now defaulted in paying, occasioning bitter pain for the suppliers and their families.

Many entrepreneurs took bank loans to supply goods or undertake infrastructure projects for the counties.

However, most of them have not been paid and have therefore been left reeling under heavy debts.

This has created a situation where properties are being auctioned, pushing the fellows deeper into misery.

On their own, the counties are saddled with huge pending bills, which they argue arose because of lack of funding from the central government.

But it all boils down to the performance of the economy. It is instructive that the Economic Survey Report released last week painted a rosy picture of the status of the economy, presenting a 6.3 per cent growth, compared to 4.9 per cent the previous year. But in reality things are thick.

As the country talks of industrialising, it must deal with the plight of the small traders, who provide the bedrock for the economy.

The Micro and Small Enterprise Authority, established a couple of years ago, must take up the challenge and adopt policies and structures to salvage the situation. In the meantime, counties should pay money owed to SMEs.