Efforts directed towards capacity building of micro, small and medium enterprises are yet to be well structured in a manner that ensures their sustainable growth. With their contribution to new jobs in Kenya standing at 90% and accounting for 35% of the country’s GDP, there is a gap that needs to be filled which will enhance their productivity. Most businesses in the informal sector continue facing steep hurdles that undermine their performance.
The European Commission’s Guide for Training in SMEs puts forward actions that will enhance the performance of businesses in the sector. Some of the interventions consist of factors that ensure the success of a business from which valuable lessons can be drawn. These include anticipation of skills, assessment, adoption of a collective approach, exploitation of opportunities as well as providing guidance and support.
The anticipation of skills and competence related to the needs of the market is crucial in order for a business to remain relevant and up to date in a rapidly changing economy. A good example is that of businesses having the skills necessary to work with new technologies that will increase their output and make them more productive. This factor enhances the longevity of a business in a way that it constantly adapts to the needs of clients.
In the area of assessment, it is important for businesses to constantly carry out a needs assessment. This will put them in a better position when it comes to assessing their requirements, and thus assist in the setting of objectives that facilitate the planning of their operations. More importantly, the evaluation and modification of the results regarding the chosen objectives is a crucial element of developing a permanent culture of assessment. This process enables them to become dynamic in the markets in which they operate.
A collective approach is important when engaging with the informal sector. Public institutions in the field of training, professional bodies as well as social partners such as development finance institutions need to be actively involved in the development and execution of strategies that are aimed at strengthening the sector. This collective investment will provide a solid foundation for building and qualitatively growing this sector of the economy.
The collaborative effort mentioned above should be governed by the principle of guidance and accompaniment. This approach points towards the mentoring of informal businesses in a way that helps them to overcome the obstacles that they face. This can be done by assisting them to put in place and strengthen internal organisational structures such as having detailed and updated financial records. Businesses in this sector of the economy can also learn a lot from each other by sharing practices that make them more productive.
Last but not least is that informal businesses need to be facilitated in a way that will enable them to maximise the opportunities within their field of operation. In the light of this, the right information such as local and regional market opportunities need to be availed to them. This has to be coupled with policies that facilitate their access to these opportunities. When correctly equipped and facilitated, informal businesses will grow due to these new economic and social opportunities.
Informal Economy Analyst