Venture capital in Kenya: restructuring the competition regulatory framework to aid venture capital financing of Small and Medium Enterprises

Abstract

In Kenya and around the globe SMEs have a proven track record as boosters of economic development by creating wealth and employment. They on the other hand face the major challenge of a lack financing since they have limited viable options where they can access financing, this study advances venture capital as a useful financing mechanism doubly beneficial to SMEs. In advocating for venture capital, its association with SMEs in Kenya is negatively affected by merger provisions within the competition laws that regulate the aspect of control. This thesis effectively argues that the merger regulations as contained in the Competition Act of Kenya, fail to account for venture capital activity in relation to the financing of SMEs. The thesis goes into detail expounding on the challenges the competition regulations raises that pertain to the venture capital sector. It finds that legal and regulatory competition policies that are scrutinized herein could possibly act as hindrances to the creation and development of venture capital companies in Kenya. This finding reflects positively on the hypothesis of the study, leading to the conclusion that restructuring the competition regulatory framework to better suit venture capital transactions would arguably benefit the venture capital sector and in turn aid SMEs and their dire need to access the adequate financing they require to grow and expand.