NAIROBI, Kenya, Dec 8 – The Industrialisation Ministry intends to set up an Industrial Development Fund which would support business incubators and technology parks in Kenya.,
Industrialization Assistant Minister Nderitu Mureithi revealed on Monday that the proposal was contained in a draft of National Policy on Business and Technology Incubation which is due to be presented to the Cabinet soon.
“The policy would help us strengthen the existing business incubation initiatives. It also aims at creating new incubators as well as setting up other science and industrial parks,” he said adding that the Fund would be administered by a Trustee.
In the country’s economic development agenda, Vision 2030, the government hopes to set up at least five Small and Medium Enterprises (SMEs) parks and two Special Economic Zones by the end of the first Medium Term Plan in 2012. Currently, Kenya has about 40 business incubators and 52 Export Processing Zones (EPZs) two of which are government-owned.
The strategy, he explained would also encourage and facilitate cooperation between business, educational institutions, technology-driven laboratories and research centres together with other public institutions in a more coherent way.
“Maybe, we should encourage those entrepreneurs that are involved with developing the industrial parks to team up with those providing incubation know-how so as to create the conditions necessary for technology transfer,” he said.
Mr Mureithi said the government was keen to support business incubation, which nurtures new operations in a bid to increase their survival rates which eventually encourages more SMEs to thrive.
The concept of technology and business incubation, where clients are provided with office space, administrative services and internet at highly subsidized fees, has been used in many countries where it has been seen to reduce the failure rate of new businesses from an average 80 percent to 15 percent.
The Assistant Minister said the technique also helps to foster innovation and the creation of job opportunities thus the need for the government to put in place political, economic, social and technological infrastructure that will allow business incubation to take root in the country.
“Incubators fertilize the entrepreneurial seed-beds thus creating opportunities for all types of firms. They are the engine of growth that we need to help us achieve our Vision 2030,” he said.
Mr Mureithi who spoke during the celebrations to mark the first Global Business Incubation day urged the Business Incubation Association of Kenya (BIAK) to monitor the businesses that they support long after they have graduated in order to evaluate their success rate and the jobs and investments created.
“The idea of incubation is not for the entrepreneur to sit in an incubator for 10 or 20 years; he should take about two or three years so that the enterprise can find its feet and be able to graduate,” he charged.
While admitting that commercial banks shy away from financing start-up businesses that have no proven track record, Mr Mureithi challenged the youth to take advantage of the government’s initiatives to provide funding at the grass roots level. He cited the Joint Loans Board credit scheme that has been largely under- utilized by Kenyans despite having been established in the 1950s.
The Assistant Minister also proposed the establishment of ‘specialised windows’ within financial institutions which are willing to take a little more risk and finance start-ups.
“This is why specialised teams which can understand the potential of a product offered by a young innovative start-up are needed to take the calculated risk of financing these entities,” he stressed.