Smes
FINANCIAL GROWTH AND CHALLENGES FACING THE GROWTH OF SMEs IN KENYA
CHAPTER ONE; INTRODUCTION
1.1 BACKGROUND
In recent years, the nurturing of SMES have become the dominant theme of development economics. This rediscovery of the importance of the spirit of free enterprise was undoubtedly prompted by the failure of centrally planned communist economies. The achievement of impressive prosperity by certain East Asian and western countries also encouraged the start up of SMES (Mwaura, 2006)
A global perspective
There is no generally accepted definition of small businesses because the clarification of businesses into large scale or small scale is a subjective and qualitative judgement. For instance, in the US, Britain and Canada, small scale business is defined in terms of annual turnover and the number of paid employees. In Britain, small scale business is defined as that industry with an annual turnover of 2 million pounds or less and with fewer than 200 paid employees. In Japan, they are defined according to the type of industry, paid up capital and number of paid employees. Consequently, SMES are defined as; those in manufacturing with 100 million yen paid up capital and 300 employees, and those in the retail and service trades with 10 million yen paid up capital and 50 employees (Valsamakis and Sprague, 2001).
There is no single, accepted definition of a small and medium enterprise (Storey, 1994, Valsamakis and Sprague, 2001). While the definition of a SME differs from country to country, the SME literature has typically used criteria such as sales volume, number of employees (for manufacturing) and fixed physical assets (Kathuria, 2000; Lefebvre et al., 1992; Valsamakis and Sprague, 2001).
In Kenya, microenterprises are those with 10 or fewer workers, small enterprises have from 11 to 50 workers and medium enterprises have from 50 to a 100 workers. There are however no records to show these classifications in Kenya. Censuses indicate that micro
CHAPTER ONE; INTRODUCTION
1.1 BACKGROUND
In recent years, the nurturing of SMES have become the dominant theme of development economics. This rediscovery of the importance of the spirit of free enterprise was undoubtedly prompted by the failure of centrally planned communist economies. The achievement of impressive prosperity by certain East Asian and western countries also encouraged the start up of SMES (Mwaura, 2006)
A global perspective
There is no generally accepted definition of small businesses because the clarification of businesses into large scale or small scale is a subjective and qualitative judgement. For instance, in the US, Britain and Canada, small scale business is defined in terms of annual turnover and the number of paid employees. In Britain, small scale business is defined as that industry with an annual turnover of 2 million pounds or less and with fewer than 200 paid employees. In Japan, they are defined according to the type of industry, paid up capital and number of paid employees. Consequently, SMES are defined as; those in manufacturing with 100 million yen paid up capital and 300 employees, and those in the retail and service trades with 10 million yen paid up capital and 50 employees (Valsamakis and Sprague, 2001).
There is no single, accepted definition of a small and medium enterprise (Storey, 1994, Valsamakis and Sprague, 2001). While the definition of a SME differs from country to country, the SME literature has typically used criteria such as sales volume, number of employees (for manufacturing) and fixed physical assets (Kathuria, 2000; Lefebvre et al., 1992; Valsamakis and Sprague, 2001).
In Kenya, microenterprises are those with 10 or fewer workers, small enterprises have from 11 to 50 workers and medium enterprises have from 50 to a 100 workers. There are however no records to show these classifications in Kenya. Censuses indicate that micro