Law-Growth Nexus II: Labour Law and the Enabling Business Environment for SMEs in Kenya and Zambia The major part of non-agricultural employment in the sub-Saharan African region is found in micro, small and medium-sized enterprises characterized by economic precariousness and a decent work deficit. One key constraint that hampers growth potential and the development of decent work in small and medium-sized enterprises (SMEs) in the region is the prevailing ineffectiveness of the rule of law and the general lack of respect thereof. This problem, as it affects SMEs, may be summarized into three important parts: the prevalence of generally inappropriate regulations for the SMEs (e.g., outdated and unnecessary regulations causing adverse effects, such as unnecessary cost on business and growth-traps); secondly, the inappropriate design of institutional structures and settings and their poor capacity to support SMEs in their compliance with current laws and regulations; and thirdly, inadequate representation of the SMEs in policy formulation processes. The Law-Growth Nexus II project will stimulate and support local stakeholders and national governments in Kenya, South Africa and Zambia to promote the development of SMEs through more inclusive and “smarter” labour regulations, and build capacities in national organizations to deliver advisory services to the SMEs. The project strategy is based on a systemic approach to SME development that promotes analysis and action across a system of issues that affect SME behaviour rather than just a small part of it. The project brings together interventions that influence the labour policies and regulations and addresses the two-folded challenge of creating an environment that advocates decent work and lowers the cost of operating an SME, which includes specific gender analysis of labour regulations to identify how they may be reducing the productivity of women owned SMEs. The project will also strengthen the delivery capacity of the national Governments, social partners and other stakeholders that promote and enforce regulations and represent the SMEs. The project is not directly concerned with micro-level interventions, thus linkages with other employment and entrepreneurship promotion projects with micro-level interventions, such as Sustaining Competitive and Responsible Enterprises (SCORE), Promoting Women’s Entrepreneurship Development and Gender Equality (WEDGE), Broad Based Wealth and Job Creation (BBW&JC), Accelerating Recovery from the Global Economic Crisis through the Creation of Decent and Green Jobs in Small and Medium Scale Enterprises Operating in the Building & Construction Sector, and the Youth Entrepreneurship Facility will be explored to seek scale and unlock synergies. The project will work with a broad spectrum of local stakeholders and national Governments, e.g., governmental ministries, employers’ and workers’ organizations, private sector representatives, business membership organisations, business media, academia, non-governmental organizations, international organizations and donors. However, it is envisaged that the tripartite organizations will be the project’s main partners. The project will be based in ILO Pretoria, South Africa, and have national project staff in Kenya, South Africa and Zambia. The project will be technically backstopped by the Decent Work Support Team for Eastern and Southern Africa, and administrational and financial supervised through the Area Office for Botswana, Lesotho, Namibia, South Africa and Swaziland. The project will also draw on the expertise of the ILO Offices in Lusaka and Dar es Salaam, the Small Enterprise Programme (EMP/SEED), Social Dialogue (DIALOGUE), the various areas of projects and work in the Job Creation and Enterprise Development Department (EMP/ENTERPRISE) and technical input from other units in the four sectors of the ILO and from the International Training Centre, based in Turin, Italy, for capacity building.