Strengthening private sector engagement in the oil and gas value chain in Kenya

Oil and gas finds in Kenya present a unique opportunity that can cement the path towards sustainable development. Enhanced SME engagement in the sector is a critical lever for sustainable development. Together with micro enterprises, SMEs are estimated to contribute about 33.8% to Kenya’s GDP and employ close to 14.9 million Kenyans. These figures are likely to rise if SMEs are strengthened to sustainably participate in the nascent oil and gas sector. Nevertheless, SME sustainability is considerably constrained due to inadequate capacity, lack of information on market and quality standards, and lack of access to technological knowhow and resources to strengthen their operations consistent with international standards for the oil and gas supply chain, among other challenges. Kenya has recently enacted the Petroleum (Exploration, Development and Production) Act 2019 and is in the process of developing a local content policy and petroleum local content regulations. While a robust legal and policy framework is crucial, it is not in itself the panacea to the growth of SMEs and participation in the quality-intensive oil and gas sector. There is a resounding need for collaborative efforts to enhance the capacity of SMEs and address other constraints that hinder their growth.