Annabell karanja

With the spread of capitalism and globalization, entrepreneurship continues to gain importance (Rwigema & Venter, 2004:315; OECD, 2002b:7; GEM, 2005b:5; Dawson, Breen & Satyen, 2002:302; Lee, Lim, Pathak, Chang & Li, 2006:352). Statistics show that there is no better way to provide a broad basis for rapid economic growth than to dramatically increase the number of active entrepreneurs in a society (McCleland, 1986:232; Pretorius, van Vuuren & Nieman, 2005b:413; Timmons, 1999:4; Themba, Chamme, Phambuka & Makgosa, 1999:103; Watson).

Linked with entrepreneurship is the SME sector. The important contribution of a dynamic SME sector to economic growth has been widely acknowledged (Timmons, 1999:17; Henning, 2003:1; McPherson, 2000:514; Baron, 1998:275; Dresler, Blenker & Nielsen 2003:383). SMEs are said to be major components of many economies (Miller, Besser, Gaskill & Sapp 2003:215). As a result, most governments, bilateral and multilateral agencies as well as non-governmental organizations worldwide have policies in place to assist entrepreneurship development (Rogerson, 2001a:115; Honig, 1998:372).

According to the Ministry of Trade, Kenya has about 1.6 million registered SMEs, constituting 96 per cent of all business enterprises in the country. These employ about 5.1 million people, 75 per cent of the total labour force which contributes 20 per cent to Kenya’s GDP.
In the last ten years, K       enya’s SME sector has witnessed significant growth and this trend is expected to be on the increase. However, currently the sector is experiencing several problems that include limited access to markets; inhibitive legal and regulatory environment; inadequate skills and technology; poor quality of products, inadequate business skills; limited access to information; and limited linkages with large enterprises. This has affected the productivity and competitiveness of the sector hindering its growth and graduation into medium and large enterprises.

There is therefore still much work to be done to strengthen the sector. Specifically there has been a significant realization of the need to look at capacity building of business skills that help SMEs make sound business decision.