UN embraces Kenyan MSMEs as supply volumes grow

United Nations is keen to open more procurement opportunities for local Micro, Small and Medium Enterprises (MSMEs), as Kenya remains among top supplying countries.

This is on the back of substantial challenges in gaining market access by MSMEs, particularly those owned by vulnerable groups, as well-established and financially stable local companies and multi-nationals dominate the supply chains.

The United Nations Office for Project Services (UNOPS) is targeting small businesses in a “sustainable procurement” drive, aimed at building capacity and unlocking more opportunities for local suppliers.

“MSMEs are not strongly represented in the UN supply chain,” UNOPS Eastern and Southern Africa director, Rainer Frauenfeld, said on Tuesday.

This is despite Kenya being the leading African country in supplying the UN, and 13th overall, where the organisation is sourcing goods and services from suppliers in at least 222 different countries and territories.

Latest data shows the value of goods and services supplied by Kenya last year was at $634.1 billion (Sh94.1 billion), an increase from Sh62.4 billion the previous year.  

Top 10 suppliers are US, Belgium, UK and Northern Ireland, Denmark, Switzerland, India, UAE, Turkey, France and Afghanistan.

In Africa, Kenya, Ethiopia and Sudan are the main suppliers.

Kenya hosts several UN agencies including the UN headquarters in Africa.

The UN has at least 32 procurement categories which local suppliers could tap, among them ICT, fuel, air transport, building and construction, food and catering, transport, industrial cleaning, financial and insurance, lodging and conferences, engineering services, among others.

“There is need to get the right tools and bring more MSMEs into the supply chain,” said Shaheen Nilofer, UN Resident Coordinator ad interim, Kenya, adding that this segments has the potential to immensely contribute to achievement of Sustainable Development Goals.

The two spoke in Nairobi during a forum on sustainable procurement, hosted in collaboration with the State Department of Micro, Small and Medium Enterprises.

The 2030 Agenda for Sustainable Development includes 17 Sustainable Development Goals and 169 targets, among which goal 12 specifically addresses the need to “ensure sustainable consumption and production patterns” through 11 different targets.

Among them is target 12.7, which aims to “promote public procurement practices that are sustainable, in accordance with national policies and priorities.”

Principal Secretary, State Department of Micro, Small and Medium Enterprises, Susan Mang’eni noted that local businesses are facing a myriad of challenges, hindering them from competitively participating in the domestic and international markets.

They include lack of resources (finance, technology, skilled labour, market access and market information).

Others are lack of economies of scale, higher transaction costs relative to large enterprises, lack of networks, increased competition and concentration from large multinationals and inability to compete against larger firms on research and development, hence fail to grow on product development.

This is despite MSMEs accounting for up to 90 per cent of private enterprises, contributing about 40 per cent of GDP and accounting for over 80 per cent of employment.

It is estimated that up to 400,000 SMEs die annually in Kenya with almost 90 percent of them not being able to see their second birthday.

According to the Central Bank of Kenya, access to credit has remained a big headache for small enterprises, limiting their growth and expansion.

Mang’eni said the Kenya Kwanza government has however prioritised the MSME sector among the five key pillars that will be key in driving economic development for the next five years.

They have been integrated into agriculture, housing and settlement, healthcare and digital superhighway and creative industry, to ensure full participation.