Fashion designer Kim Kyallo showcases his wares at the SMEs exhibition at the Kenyatta International Convention Centre in Nairobi, Kenya, on February 24, 2020. PHOTO | DENNIS ONSONGO | NATION MEDIA GROUP More than half of all countries across the world have a CGS, but in East Africa only Tanzania has established the scheme that is managed by the Bank of Tanzania.
Last April, in a State of the Nation Address, President Uhuru Kenyatta promised an SME credit guarantee scheme “in a few weeks” to exempt them from complex application procedures and collateral requirements.
A year later, the situation remains the same, and the Central Bank of Kenya this week revived the push for the Credit Guarantee Scheme to encourage banks to increase lending to MSMEs.
The outbreak of Covid-19 has subjected micro, small- and medium-enterprises (MSMEs) in Kenya to more financial woes as lack of Credit Guarantee Scheme lock them out of funding opportunities.
As a result, MSMEs will not benefit from the mitigation measures deployed by the Central Bank of Kenya’s Monetary Policy Committee against impact of economic and financial disruptions caused by Covid-19 pandemic.
Last April, in a State of the Nation Address, President Uhuru Kenyatta promised an SME credit guarantee scheme “in a few weeks” to exempt them from complex application procedures and collateral requirements.
A year later, the situation remains the same, and the Central Bank of Kenya this week revived the push for the Credit Guarantee Scheme to encourage banks to increase lending to MSMEs.
If established, the scheme will receive funding from the National Treasury that would be used to repay banks in case MSMEs default on their loans.
More than half of all countries across the world have a CGS, but in East Africa only Tanzania has established the scheme that is managed by the Bank of Tanzania.
“Given the critical role of MSMEs in the economy, there is an urgent need for more interventions to support the sector by credit guarantee scheme to de-risk lending by banks and increase credit uptake in the sector,” said CBK governor Dr Patrick Njoroge, after Monetary Policy Committee (MPC) meeting held on Wednesday.
Data by the Kenya National Bureau of Statistics show that MSMEs comprise about 75 per cent of all businesses, contribute 25 per cent of gross domestic product and employ 7.5 million people. Despite their huge contributions to the economy and job creation, only 20 per cent have access […]
