Special Paper No. 30 of 2022 on Research Ecosystem Strengthening through the Development of a Framework for County Business Environment for Micro and Small Enterprises in Kenya

Abstract

This research paper presents the County Business Environment for MSEs (CBEM) 2022. CBEM is a framework that provides a tool for monitoring progress in improving the business environment for growth and survival of MSEs. In 2019, KIPPRA developed the first version of CBEM covering four critical thematic areas that support growth and development of micro and small enterprises, including worksites and related infrastructure, market environment, technical capacity, and governance and regulatory framework. The CBEM 2022 extends this work to capture emerging issues affecting MSEs’ business environment, including Internet connectivity within the worksites, trade participation in market environment and participation in policy and regulatory framework formulation under governance and regulatory framework. Further, two thematic areas on financial inclusion and risk preparedness and management are included, making up a total of 30 indicators. The overall score for 2022 was 29.37, a slight improvement from the status in 2019 at 20.98. Self-regulation was ranked the highest performing indicator, demonstrating the efforts by MSEs to form associations to support their operations. Innovation and patenting pillars scored the least, indicating the need to emphasize on policy interventions that promote innovations and subsequent patenting among the MSEs. On average, the counties that ranked top of the score were Nairobi, Nandi, Kiambu and Nyeri.