NAIROBI, Kenya, May 28-At least 75 percent of Small Medium Enterprises risk closure by end of June due to some of the challenges posed by the outbreak of the coronavirus disease in the country.
Speaking during a post-Monetary Policy Committee briefing, Central Bank of Kenya Governor Patrick Njoroge said that a research done last month revealed that the sector’s players do not have enough funds to keep up with their operations past June.
“There was a survey that was done at the end of April and that survey indicated that three-quarter of the surveyed SME’s do not have cash beyond two months,” said Njoroge.
He further stressed on the urgency needed to channel funds to the greatest contributors to the country’s GDP to rescue them from a total collapse.
“This is extremely urgent, we cannot do this as business as usual and I think unfortunately even when things are urgent, they end up taking up the cynic route in terms of implementation,” he added.
However, this is not the first time CBK governor Patrick Njoroge has raised a concern on how SME’s are cushioned under this pandemic.
“ We do need to have a framework where the SME’s can borrow and minimize the risk to the lender so we are thinking of a fund someone in the order of Sh100 billion so this is something we need to work out, give us sometime give us some space we will let you know,” Njoroge said last month during post MPC meeting.
The governor’s sentiment comes at a time when President Uhuru Kenyatta last week unveiled Sh3 billion as monies set aside for the Small and Medium Enterprises Guarantee Scheme.
Data by the Kenya Association of Manufacturers revealed that Kenya has close to 7.41 million with only 1.56 million being licensed whereas 5.85 million are unlicensed.
They contribute an estimated 40 per cent of the GDP with the majority falling in the informal sector.
On Wednesday CBK maintained its benchmark lending rate at 7.00 percent, noting the policy measures adopted in March and April to tackle the effects of the coronavirus were having the intended effect on the economy, and are still being transmitted.