A recent report by the Financial Transparency Coalition (FTC) indicated that Kenya has channeled a mere one per cent of Covid related bailout funds to SMEs, despite having a credit guarantee scheme and on lending funds by banks. George Onyango with fellow jua kali artisans at his Kamukunji workshop, Nairobi /JACK OWUOR Majority of small businesses are yet to benefit from state-backed bailouts and funding under the credit guarantee scheme, according to the Micro and Small Enterprises Authority (MSEA).
The authority has now warned banks and other credit institutions against fundraising under the guise of on-lending to SMEs, but end up channeling the monies to other uses.
It said some financial institutions have secured concession loans for SME lending, but end up charging exorbitant rates.
In September 2020, the government established a Credit Guarantee Scheme for Micro, Small and Medium Enterprises, as part of its interventions to cushion them from the effects of the Covid-19 pandemic, monies MSEA says has not benefited the targeted group.
“There are people who told the President that we have received these funds and we have not received as much as we should have. There are also those who have secured very soft loans saying they are coming to help the SMEs space but they don’t,"MSEA chairman James Mureu said.
"If they don’t change, we shall name and shame them,” he warned.
Mureu was addressing journalists in Nairobi on Wednesday after chairing the board’s first national consultative meeting.
The state-backed Credit Guarantee Scheme commenced with an initial seed capital of Sh10 billion and was to be released in two tranches of Sh5 billion in 2020-21 and 2021-22.
Development financial institutions and participating commercial financial institutions were further expected to boost the state’s contributions to at least Sh100 billion.
Banks that partnered with the scheme include KCB, NCBA, Co-op Bank, Absa, DTB, Stanbic and Credit Bank.
Equity, which has been receiving funding from global entities for on-lending to SMEs, on the other hand announced it would lend Sh75 billion to small businesses at concessionary terms.“People are raising funds for the SMEs but that money disappears in between. If you are giving money to SMEs let it be measurable, let it be seen, let the authority (MSEA) be aware and let the sector be able to know where the money has gone,” said Kenya National Federation of Jua Kali Associations chief executive, Richard Muteti, said:A recent report by the Financial Transparency Coalition (FTC) shows that Kenya […]