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New storyline needed to appreciate roles of MSEs better

Tuesday January 1 2019

SMEs

MSEs are part of our solutions for development. We need to understand their story and stop misrepresenting them in our development, academic and political discourse. PHOTO | FILE | NMG 

NJERI KINYANJUI
By NJERI KINYANJUI
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At a presidential roundtable on micro and small enterprises (MSEs) at Strathmore University, Nairobi, last year, President Uhuru Kenyatta rejected his written speech after listening to the business community. He said that it misrepresented the story of MSEs in the national economy and their relationship with the government.

The misrepresentation is not unusual in everyday development and academic discourse, having began with the work of Keith Hart and the International Labour Organisation (ILO) in the 1970s, when they were labelled as the “informal sector”. Then, Hart and ILO contrasted the informal to the formal sector.

OPERATION

Informal sector was said to contain the following attributes: Ease of entry, reliance on indigenous resources, family ownership, small scale of operation, labour intensive and adapted technologies, and skills acquired outside formal school system.

The formal consisted of the opposite, including: Difficulty of entry, frequent reliance on overseas resources, corporate ownership, large scale of operation, capital intensive and often imported technologies, formally acquired skills, often expatriate, and protected markets (through tariffs, quotas and trade licences).

Formalisation of the informal sector — that is, making it acquire the attributes of the formal one — was proposed as a development strategy.

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The attributes of the informal sector represented an indigenous strategy that was ubiquitous and would save on foreign exchange. But instead of adopting it, African governments were advised to prompt the formal sector, most of it import substituting that depended on foreign skills, technology and capital. It would have made sense to promote the informal sector without trying to change it or spreading coloniality.

The second misrepresentation happened during the Structural Adjustment Programme (SAP), when the sector was identified as a safety net for shielding people from the adverse effects of the liberalising economy. But instead of first studying how the sector had evolved since Hart and ILO, the strategy was an extension of formalisation.

CREATIVITY

The period coincided with Hernando de Soto’s writings of the other path. According to De Soto, the informal sector was the pathway to capitalist development, which had been shut out by laws and regulations on property rights and lack of business registration. If these legal hurdles were cleared, the informal sector revolution would take place. The strategy adopted during this neoliberal period entailed further intensive formalisation. Programmes included the World Bank Voucher Training Programme, supply of equipment and training and demonstration centres by the UNDP. The government created the Ministry of Technology and Technical Training and asked county councils to provide Jua Kali spaces and the artisans were encouraged to form associations. The underlying factor was that Jua Kali is a faulty sector that needed reform and guidance.

MSEs could contribute greatly to the revival of our economy if we allowed the sector to tell its own story about survival. Elite development and academic professionals should learn and engage with subaltern knowledges in the sector. That involves understanding the solidarity entrepreneurialism; how they share space and transaction costs in places such as Uhuru Market, Kamukunji and Gikomba, Nairobi.

Secondly, learn how MSEs build communities to harness human agency and creativity. It takes a lot of creativity and self-determination to produce goods in these markets. It involves setting rules for fairness and order in production and exchange.

SOLUTIONS

Thirdly, understand their philosophy on wealth and well-being — values and norms about gifting, sharing and reciprocity in determining wealth and well-being.

Fourthly, there is a need to understand how learning takes place in the MSE clusters. What kind of pedagogy is transferred? How it is transferred and delivered? What are the dos and don’ts? What are the rewards and punishments? How is order maintained?

Then, we shall know how to engage with MSEs without feeling embarrassed. We can then design programmes that will enhance the sector rather than trying to change it.

MSEs are part of our solutions for development. We need to understand their story and stop misrepresenting them in our development, academic and political discourse. This will serve as a basis for technical and vocational education.

Dr Kinyanjui, a researcher at the Institute of Development Studies, University of Nairobi, is the author of several books. [email protected]

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