Banks disbursed a total of KSh 2.11 Billion to support 1,291 Micro, Small and Medium-Sized Enterprises(MSMEs) through the state-run Credit Guarantee Scheme(CGS) in 2021.
In the 2020/21 financial year, the state set aside KSh 3.0 billion to the scheme, allowing lenders to disburse at least KSh 12 billion to business entities that meet the cut.
Available figures indicate that CGS funds that were absorbed in 2021 amounted to KSh 546.2 Million, with a balance of KSh 2.5 Billion still available to guarantee upwards of KSh 9.8 Billion from participating lenders to businesses that qualify for the loan.
MSMEs that could access credit through this scheme were distributed across 45 counties 11 different economic sectors and resulted in the employment of 8,975 Kenyans.
Only seven commercial banks are involved in the CGS, namely KCB, NCBA, Stanbic, Diamond Trust Bank, ABSA Bank, Credit Bank and Co-operative Bank of Kenya.
The Credit Guarantee Scheme has been operational since December 2020 and is designed to support MSMEs in accessing credit from banks.
In 2021, some 338 Credit Guarantee Scheme facilities were issued compared to two facilities the prior year.
According to Treasury CS Ukur Yatani, the state has been working with lenders to improve the scheme and to make it sustainable, to ensure it meets international best practices and principles that cover public credit guarantee schemes.
Available figures from Treasury indicate that in 2021, a large percentage of credit guarantee scheme beneficiaries were SMEs, while the rest were medium-sized enterprises and the least as marginalised groups- including women, youth and persons living with disabilities.
The CGS is anchored in the Public Finance Management Act and Credit Guarantee Scheme Regulations and is designed to enhance access to affordable credit by MSMEs.
It targets entities that would otherwise be unable to raise the required collateral for such loans and face an uncertain and risky business environment.
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