Policy Brief No. 19 of 2022-2023 on Integrating Small and Medium Enterprises into Global Value Chain through Financial Interventions

Abstract

Kenya is yet to fully tap its potential in positioning itself in the global production network. Primary agriculture and minerals still dominate its share of global trade participation. Firm involvement in grobal value chains (GVCs) has potential to create employment opportunities and ultimately propel structural transformation. However, despite a relatively strong geographic and logistic positioning, most Kenyan firms, especially the Small and Medium-sized Enterprises (SMEs) mainly produce for the domestic market. The country’s involvement in Global Value Chains (GVCs) is still limited, and mostly on low valueadded phase. Only 15% of SMEs in Kenya engage in global value chains. Significant gaps between GVC players and non-GVC players emanate primarily from financial constraints.1 SMEs have a higher level of financial vulnerability, lack lead firm’s technical assistance, technology and skills transfer.