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Govt to guarantee loans to SMEs in scheme announced at #SOTN

The scheme, which will make the state guarantee commercial loans issued to SMEs, is seen as an initiative to counter the depressed credit to SMEs/FILE

NAIROBI, Kenya, Apr 4 – President Uhuru Kenyatta has announced that an SME Credit Guarantee Scheme will be launched in a “few weeks.”

In his state of the nation address, the President said the scheme will deepen access to credit, “without being subjected to complex application procedures and collateral requirements.”

The scheme, which will make the state guarantee commercial loans issued to SMEs, is seen as an initiative to counter the depressed credit to SMEs that has been on a downward trend over the last five and exacerbated by capping of interest rates.

“My Administration recognizes the role played by micro, small and medium enterprises in spurring the development of our country.  The sector employs approximately 14.9 million Kenyans and contributes an estimated 28 % of our Gross Domestic Product,” said the President.

He added that that scheme will unlock the potential resident in the sector and is part of the government’s efforts of addressing access to credit, training and skills development.

“These interventions are critical to production of competitive goods and services for the domestic, regional and globally markets.”

According to the World Bank, Credit Guarantee Scheme help de-risk SME lending by providing partial guarantees in the case of default.

Kenya will seek to borrow implementation of successful schemes from Malaysia, the US and South Korea who have supported SMEs through special vehicles.

He also said that a Common Manufacturing Unit at Kariokor Market to boost the leather value chain is almost complete.

“Once fully equipped, this Centre will provide impetus to the local shoemaking industry, to professionalize and standardize manufacture of shoes.”

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