Connect with us

Hi, what are you looking for?

Capital Business
Capital Business

Kenya

Sh3.8b Fund to propel MSE sector

NAIROBI, Kenya, Mar 14 – The Ministry of Finance has rolled out the Financial Inclusion Fund for the informal sector that is expected to ease access to credit for the micro and small enterprises sector.

The Fund, which was announced during the 2010/2011 Budget, will see the Treasury make available Sh750 million for borrowing by players in the MSE sector.

Speaking during the launch, Finance Minister Uhuru Kenyatta said the ministry had contracted three banks that are expected to match each shilling made available by the government by five shillings, bringing the total kitty to Sh3.8 billion for the sector.

"Our overall objective is to ensure that our MSE sector becomes efficient, innovative and has a competitive project range and transform it into a more formal sector," Mr Kenyatta said.

The minister pointed out that the major challenge for the sector has been the high cost of borrowing, adding the Fund would offer competitive interest rates that will bolster growth of the sector.

The Treasury is also in the process of developing other financial services focusing on the low income and informal sectors.

"The government recognises these constraints and is indeed implementing a program of creating and expanding access to formal markets so as to graduate small enterprise from the informal sector," Mr Kenyatta said.

SMEs have a high a risk profile, which makes it difficult for them to access traditional sources of credit and finance.

According to the government\’s Economic Survey 2010, the SME sector employed 8.3 million people in 2009 and creates 590,000 new jobs annually though its contribution to Gross Domestic Product has stagnated at 18 percent.

Advertisement. Scroll to continue reading.

The Ministry has contracted Equity Bank, K-Rep Bank and the Co-operative Bank, which will each receive Sh250 million, to roll out the first phase of the program.

The banks are yet to establish at what rate they will be lending the Funds.  K-Rep Bank Managing Director Albert Ruturi said they would not be applying the same interest rates as the normal commercial lending rates.

The government views the SME sector as one of the key drivers of economic growth and has been putting in place measures to grow the sector.

The sector is also set to benefit from the Micro, Small and Medium Enterprises Bill that is to be presented before Cabinet later this month.

The Nairobi Stock Exchange is also working on creating a new segment to allow players in the sector to allow them list on at the bourse and seek alternative funding to support growth.

Follow the author at https://twitter.com/MjKaranja

 
 

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...