Kenya is set to launch a 10 billion shilling (about 92 million U.S. dollars) micro, small and medium enterprises (MSMEs) credit guarantee scheme in October to boost post-COVID-19 economic recovery, a government official said Wednesday.
Albert Mwenda, acting director-general, budget fiscal and economic affairs, National Treasury, told a meeting in Nairobi that the government is prioritizing facilitating small firms due to their significant contribution to the gross domestic product (GDP).
“The aim of the guarantee is to facilitate access to affordable credit to MSMEs by reducing their default risk on loans,” Mwenda said during the ninth edition of the Kenya Bankers Association (KBA) annual banking research conference which runs from Sept. 23 to 25.
The theme of this year’s conference was to showcase and stimulate discussion on “Banking and Socio-Economic Development: Market Structure, Behavioural Evolution and Policy Dynamics”.
According to the National Treasury, the credit scheme received Cabinet approval early this month and will be funded through public resources.
Mwenda said that the government has already rolled out a mix of fiscal and monetary measures to cushion MSMEs from the negative effects of the containment measures to curb the spread of COVID-19 pandemic.
He observed that Kenya is committed to market-based regulations of the financial sector to ensure stability as well as to safeguard consumers.
Habil Olaka, CEO KBA, said that small businesses can increase their access to formal credit facilities through de-risking their business models.
Olaka said that the banking sector has not been spared from the disruption caused by the COVID-19 pandemic.
He noted that the financial industry has supported the economic rebound during the COVID-19 pandemic through the restructuring of loans to ensure clients can service their outstanding credit.
He observed that one of the measures that has enabled business continuity in the financial industry is the increased adoption of digital channels to reach and serve consumers.