NAIROBI, Kenya, June 12- The government has allocated Sh3 billion seed capital to operationalize the SME Credit Guarantee Scheme, more than a year after it was formed.
While presenting Kenya’s Sh2.79 trillion budget for the financial year 2020/2021, Treasury Cabinet Secretary Ukur Yatani said the scheme will enable the provision of affordable credit to small and medium enterprises in an efficient and structured manner.
“Despite their important contribution, this sector has continued to face challenges of accessing credit, due to lack of sufficient collateral, high cost of credit and informal business structure. These challenges have been worsened by the Covid-19 Pandemic,” Yatani said.
The CS added that with reduced turnover and disruptions in the market and supply chains, many Micro, Small Medium Enterprises are unlikely to attract affordable and quality credit under the traditional arrangements.
“In order to de-risk lending to the Micro, Small Medium Enterprises, I have set aside Sh3.0 billion seed capital to operationalize the Credit Guarantee Scheme,” he said.
Yatani also revealed that the Ministry is also actively engaging a number of Development Agencies who have shown willingness to put in additional resources to support this scheme.
President Uhuru Kenyatta recently unveiled an Sh53.7 billion economic rescue package, and dedicated Sh3 billion to fund SME’s.
Experts however argued that the amount will not be enough to sustain the sector.
“We do expect more measures to be introduced but frankly we think that as far as COVID-19 is concerned, things will get worse so the money we currently have for SME’s will not be sustainable,” Ernest and Young Tax Expert Simon Njoroge.
In May, Central Bank of Kenya Governor Patrick Njoroge said the sector’s players do not have enough funds to keep up with their operations past June 2020.
Data by the Kenya Association of Manufacturers revealed that Kenya has close to 7.41 million SMEs with only 1.56 million being licensed.