ROUNDTABLE REPORT: Alternative Dispute Resolution for Small and Medium Enterprises in Kenya
1. Background and Context Small and Medium Enterprises (SMEs) form the backbone of Kenya’s economy, contributing approximately 33% of GDP and employing over 80% of the workforce outside the agricultural sector. Despite this significance, SMEs remain disproportionately exposed to commercial disputes that are costly, protracted, and frequently unresolved through formal judicial channels. The Chartered Institute of Arbitrators (Ciarb) Kenya Branch convened a multi-stakeholder roundtable to interrogate the landscape of dispute resolution for SMEs, assess the efficacy of existing mechanisms, and identify entry points for scalable Alternative Dispute Resolution (ADR) interventions. The roundtable convened representatives from the Micro and Small Enterprise Authority (MSEA), the Judiciary, the Kenya National Chamber of Commerce and Industry (KNCCI), the financial sector, the insurance industry, and the youth entrepreneurship ecosystem. This report summarises the deliberations and perspectives presented by each stakeholder group, and distills shared conclusions, identified gaps, and proposed areas of partnership. 2. Micro and Small Enterprise Authority (MSEA) — Perspective Presenters: Maureen Gachogo- Registrar. :Agnes Thiong’o- Senior legal officer. 2.1 Nature and Typology of Disputes in the SME Sector MSEA’s frontline engagement with the SME ecosystem reveals that disputes within this sector are diverse in character and frequently multi-layered. The Authority identified three principal categories of disputes commonly encountered: •Governance disputes: These arise within SME structures, particularly cooperatives, chamas, and registered business associations, where disagreements over leadership, profit-sharing, decision-making authority, and member obligations create internal fractures. Such disputes, if unresolved, often result in enterprise dissolution or significant productive loss. •Resource disputes – Land use: A recurring category of disputes involves access to and use of land for business operations. These disputes frequently involve competing claims among traders, landlords, county governments, and community groups, particularly in the context of informal markets and open-air trading zones. The intersection of customary land tenure and formal title documentation renders these disputes complex and resistant to standard adjudicative processes. •Association and umbrella organisation disputes: SMEs affiliated with trade associations or apex bodies frequently experience disputes arising from membership obligations, levy allocation, and representational authority. These disputes tend to have sector-wide implications where the umbrella body exercises regulatory or quasi-regulatory functions. 2.2 Existing Dispute Handling Mechanisms MSEA noted that original jurisdiction over SME disputes is constitutionally and statutorily vested in the MSE Tribunal, established under the Micro and Small Enterprises Act, 2012. The Tribunal’s dispute resolution framework operates as follows: •The Registrar of MSEs issues formal invitations to the disputing parties, initiating the process without requiring legal representation. •Upon receipt of the matter, the Tribunal establishes rules of engagement tailored to the nature and complexity of the dispute. •The Tribunal assists parties in arriving at resolutions that account for both short- term needs (such as immediate injunctive relief or interim agreements) and long- term commercial sustainability. A notable feature of the Tribunal’s process is the statutory 30-day timeframe for resolution, which aligns with the commercial realities and cash flow sensitivities of SME operators. This expedited mechanism represents a significant advantage over conventional court processes, which can extend over years. Notwithstanding the Tribunal’s mandate, MSEA acknowledged systemic limitations […]