The contribution of small enterprises to household and national income in Kenya

Our analysis of this question centers around the level of income earned in the enterprise. It appears that, while some micro and small activities generate very low returns, others are producing substantially higher incomes for those who participate, either as owners or as workers. Recent survey work in Kenya enables us to be more precise about these differences and to explore the extent to which MSEs generate very low returns in survival-type activities or whether they provide impressively high incomes. We also explore the characteristics of enterprises in different parts of this range. This article proceeds as follows. Section II provides a brief review of earlier analyses of this issue. Section III describes the survey and resulting data set, which provide the basis for our analysis in this article. Section IV presents the survey results. Information is first presented on average income earned for different categories of enterprises. This is followed by findings that make use of regression analysis, exploring the factors that are correlated with income generated by the enterprise. In Section V we consider these estimated income figures through a comparison with Kenya's minimum wage. In Section VI, the income estimates are aggregated to a national level to provide estimates of the contribution of MSEs to the gross domestic product (GDP). Section VII provides a summary and conclusions and explores the implications of these findings for policies and projects.