Expensive Licenses and Permits Draining Life Out Of SMEs

SMEs

While the informal sector seems to be growing robust each day contributing to a big chunk of the country’s Gross Domestic Product, the cost of penetrating into the market and keeping abreast with pioneers is knocking a lot of Small to Medium Business (SMEs) off their feet.

According to Kenya’s economic update report by the World Bank, Kenya’s economic growth will slow down and grow at a rate of 5.7 per cent this year. This has been attributed to the poor performance of the agricultural sector However household will not be affected much by the report compared to those operating private businesses who are already having a tough time.

The high cost of permits and licenses in addition to the escalating cost of living is siphoning life out of SMEs in various parts of this country pushing some out of operation.

” In 2016, a permit used to be Ksh 5000, last year it was Ksh9500 this year it is Ksh 13500,” recalled one businesswoman.

Most SMEs noted that despite an increase in options of access to finance and credit  which used to be the main hindrance, the dwindling purchase power is drastically reducing their margins

” There are unneccessary processes in the county especially when we are trying to get the licenses. The operational fee for the license is Ksh 20000 for this room. If we add plus the fire emergencies because administrators insist that it is compulsory to pay it all adds up to Ksh24500 which according to me is a bit expensive,” lamented a businessman in Nairobi county.

The harsh environment has seen many SMEs look for cheaper alternative ways to ease the burden.

” Tried to break goods over into the country, just the cost of taxes are astronomical. For us, it is easier to bring the goods through Uganda,” noted another

Traders say the number of customers has dropped significantly in the recent year adding to the pain of the influx of substandard goods in the market and want the government to involve them in making policies that ensure ease of business.

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