The substantial economic and labour market contribution of Small and medium-scale enterprises (SMEs) has long been recognised in global dialogue on employment, and economic and social development.  Encouraging and supporting SMEs therefore form part of the policy dialogue across a wide range of international initiatives and organisations.

SMEs form the majority of the enterprises in the Kenyan economy. They employ a large share of the labour force. The sector is perceived as an alternative employer. SMEs form bulk of FKE membership and are as important as large firms in the creation of gross and net new jobs. Notwithstanding their importance, most SMEs are unable to exploit the increased market opportunities due to a number of constraints. This is because of either low productivity, incapacity to face competition from imports or in export markets, constraints to adapt new technologies and or a lack of finance. Financing of the sectors' activities is always cited as one of the problems facing the sector.

FKE advocates not only for central consideration of the unique issues and opportunities the SME sector presents, but also ensures that there is dialogue with small businesses and not simply about small business. The IOE continues to be a strong advocate for SME-led responses to various challenges, including those arising from economic and labour market crises.