Discussion Papers

No.670 Enterprise Promotion in the Road Construction Sector in a Conflict-ridden Area in Kenya: a Solution for the Nexus of Developmental Problems?


May 2017


Overcoming the missing middle syndrome by promoting growth of micro and small enterprises through training is a key to solve the nexus of problems including industrial stagnation, inequality, and ethnic confrontation in Africa. We focus on collaborative interventions by an international NGO and the Kenyan government to disseminate labor-based technology of road construction and strengthen managerial skills of youth self-help groups in a county ridden by an ethno-political conflict, called the Post-Election Violence. They tried to help groups formalize as corporations and develop their businesses through training. Our research reveals that ethnically homogenous groups might have better chances to obtain construction contracts but the reason would be trust among permanent members lowering internal transaction costs, rather than ethnicity itself. In conclusion, development of micro and small firms are to some extent determined by education of leaders and internal trust. Trainings could contribute in case groups are equipped with those conditions.

Keywords: micro and small enterprises, corporatization and formalization, socio-economic inequality, ethnic enmity and conflicts, the missing middle syndrome, stagnation of the industrial sector.
JEL classification: L74; M13; M14; N67; O14; O17

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