NAIROBI, Jan. 30 (Xinhua) -- Kenya should expand small and medium enterprises (SMEs) in order to boost overall economic growth, an expert said on Wednesday.
Mbui Wagacha, former senior economic adviser at the Executive Office of the President, told an economic forum in Nairobi that SMEs provide employment to 82 percent of the country's labor force and 25 percent of gross domestic product(GDP).
"For Kenya to achieve economic transformation, SMEs should therefore be supported due to their significant role in the country," Wagacha said during the Commercial Bank of Africa (CBA) Economic Forum that took place under the theme of achieving growth amid fiscal imbalances: the real effects of Kenya's debt trajectory.
Wagacha said that countries such as China have been able to lift millions of people out of poverty by providing SMEs with an enabling environment to thrive.
He added that the government can use a range of fiscal and policy measures to help SMEs graduate into big players in their respective fields.
He said that other incentives that could be extended to small entrepreneurs include provision of spaces and markets for them to conduct their activities.
He added that despite most SMEs operating in the informal sector, they tend to be more dynamic than their formal peers.
Wagacha, who is also a former chairman of the Central Bank of Kenya, urged the government to rethink its move to beginning taxing SMEs.
"Sometimes chasing after small entrepreneurs to ensure that they pay taxes will cost more than the revenues collected. Besides this move will also force the small firms to go underground," he added.
