Facilitating Industrial Entry for College Students in Kenya: A Legal, Business, and Finance Perspective
Kenya’s industrial sector has enormous potential to drive economic growth and development, especially given the country’s vast natural resources and young and energetic population. However, entry into the industrial sector can be challenging, particularly for college students with innovative ideas. This article explores how the legal, business, and finance aspects of industrial entry in Kenya can be made more accessible for college students, and how this could lead to increased economic growth.
As discussed earlier, Kenya has several laws in place to support industrialization, including the Industrialization Act of 1967 and the Special Economic Zones Act of 2015. Additionally, the Companies Act, the Taxation Act, and the Employment Act also play a crucial role in facilitating industrial entry.
Despite these legal frameworks, the World Bank’s Doing Business Report for 2021 ranked Kenya at 116th out of 190 countries, with a score of 56.9 out of 100. This indicates that starting a business in Kenya can be challenging, especially for small and medium-sized enterprises (SMEs). SMEs are the backbone of most economies and contribute significantly to job creation and economic growth. Therefore, the government needs to act to make it easier for college students with industrial initiatives to start their businesses.
According to a survey conducted by the African Development Bank, access to finance is one of the significant challenges faced by SMEs in Kenya. The survey found that only 26% of Kenyan SMEs had access to bank loans, and less than 2% had access to equity financing. This lack of access to finance makes it difficult for college students with innovative ideas to enter the industrial space and create viable businesses.
To address this challenge, the government and other stakeholders should take several actions to increase access to finance for college students with industrial initiatives. These include:
Encouraging the establishment of venture capital funds:
Venture capital funds are pools of money managed by investment professionals who invest in early-stage businesses with high growth potential. The government should encourage the establishment of venture capital funds specifically targeted at college students with industrial initiatives.
Creating crowdfunding platforms:
Crowdfunding is an alternative financing model that involves raising small amounts of money from a large number of people. The government should establish crowdfunding platforms that allow college students to raise funds for their industrial initiatives.
Establishing loan guarantee schemes:
Loan guarantee schemes involve the government or other entities guaranteeing a portion of a loan taken out by an SME. This makes it easier for SMEs to access loans from financial institutions. The government should establish loan guarantee schemes targeted at college students with industrial initiatives.
In conclusion, the legal, business, and finance aspects of industrial entry in Kenya must be made more accessible to college students with innovative ideas. The government can achieve this by streamlining the process of acquiring business licenses and permits, offering tax incentives and other benefits to college students, establishing a dedicated agency to support college students with industrial initiatives, and creating a network of industrial hubs across the country. Additionally, access to finance for college students should be increased by encouraging the establishment of venture capital funds, creating crowdfunding platforms, and establishing loan guarantee schemes. By taking these actions, Kenya can unlock the full potential of its industrial sector and promote economic growth and development.