NSE Chairman Kiprono Kittony speaks during the KNCCI Nairobi county chapter forum on financial and investment inclusion for SMEs/HANDOUT Small and Medium Enterprises(SMEs) have been told to tap the capital markets to raise funds for cushioning their businesses during the pandemic and future growth.
This comes as banks continue to invest heavily in government bonds, shunning lending to high-risk individuals, worsened by the pandemic which has hit businesses since last year.
Businesses are struggling with low sales on reduced working hours occasioned by the nation-wide curfew, with at least six in 10 small-sized businesses finding it difficult to pay salaries—Kenya National Chamber of Commerce and Industry (KNCCI) survey.
Nairobi Securities Exchange(NSE) chairman Kiprono Kittony yesterday affirmed the Ibuka accelerator programme and the growth enterprise market segment (GEMS) as platforms for small businesses to make an entry into the capital markets.
Kittony who previously chaired the KNCCI, faulted expensive bonds being floated by the government for “crowding out” of SMEs.
This (crowding out) is a situation when increased interest rates lead to a reduction in private investment spending such that it dampens the initial increase of total investment spending, for this case, lending to households and individuals reduces as banks go for bonds.
“I challenge KNCCI to advocate more against crowding out of SMEs by the government , and the need for a real country wide business climate index. When we have expensive bonds, banks shun lending to the private sector,” Kittony said.
He spoke in Nairobi during a KNCCI—BAT financial inclusion forum for SMEs themed,“Broadening SMEs financing opportunities for long-term economic growth.”
He called on banks to extend loan repayment relief to small businesses which continue to feel the brunt of the pandemic.
While SMEs employ more than 80 per cent of the working population in Kenya, playing a central role in economic and growth strategies, majority of them have been hard hit by a cash crunch with thousands closing.
"For a long time SMEs and startups in Kenya have had to grapple with financial limitations including capital gaps, inadequate cash flow as well as scale-up challenges. We need to address these challenges," said Geoffrey Kimani, chairman KNCCI-Nairobi.At the height of the pandemic last year, the Central Bank of Kenya governor Patrick Njoroge warned that at least 75 per cent of SMEs were facing closure due to a lack of funds.The government established the Credit Guarantee Scheme to de-risk lending to the Micro, Small and Medium Enterprises, by providing […]
