The government has launched a Sh10 billion Credit Guarantee Scheme to mitigate the impact of Covid-19 on Micro, Small and Medium Enterprises (MSMEs).
National Treasury and Planning CS Ukur Yatani, noted that Covid-19 pandemic has disproportionately impacted MSME businesses and lending institutions.
Yatani stated that the reduced turnover and disruptions in the market and supply chains, has disabled MSMEs from attracting affordable and quality credit under the traditional arrangements.
“Interventions are therefore necessary to cushion the impact of Covid-19 on MSMEs,” he said, adding that the government has considered and approved the aforementioned amount to be released over the current and next financial year for onward lending to small firms.
The National Treasury said that Kenya is keen to enhance access to affordable credit by MSMEs because of the critical role they play in the country’s economic development and employment creation.
“Commercial banks participating in the credit guarantee scheme will be compensated in the event that small firms are unable to repay the loans,” assured Yatani.
The CS further affirmed that the government has made deliberate efforts to re-engineer the growth and development of these enterprises as part of the Big Four Agenda, mainly focusing on manufacturing, increased food security and nutrition, universal health care and provision of affordable housing.
“Kenya’s development blueprint Vision 2030, targets to create a vibrant and globally competitive financial sector that drives high-levels of savings to finance the country’s investment needs,” said the CS.
The Third Medium Term Plan (MTP III) recognizes the need to facilitate an increase in productive investment initiatives to eliminate barriers to lending and investment by MSMEs.
Meanwhile, government data indicates that there are over 7.4 million MSMEs in the country, which employ approximately 14.9 million Kenyans in various sectors of the economy.
By Alice Gworo