Banking sector has raised alarm over pending bills and overegulation as key threats to Kenya’s Micro, Small and Medium Enterprise (MSME) sector.
- According to the chairman of Kenya Bankers Association John Gachora, the sector which currently contributes one third of Kenya’s GDP is overregulated with 60 per cent of enterpreneurs feeling overwhelmed by compliance requirements hindering ability to innovate and expand.
- The sector is also estimated to be owed Sh70 billion in pending bills impacting businesses viability, supply chain and making MSMEs less attractive for lending.
- The banks also endorsed planned transition of the Credit Guarantee Scheme to a private limited company with government being minority shareholders.
As at June, 2024, the scheme had over 4000 beneficiaries across 46 counties with Sh6.29 billion disbursed.
“If there is a way to prioritise MSMes who are owed these small amounts by the government, it will go a long way in unlocking the challenges faced and make the sector flourish,” Gachora noted also calling on the government to streamline some of its regulations burdening the sector.
Speaking during the 2024 Kenya Bankers Association (KBA) Inua Biashara Exhibition in Nairobi, Gachora said the banking industry has set aside Ksh150 billion each year over the next three years for lending to MSMEs to address access to finance challenges faced by the sector.
Gachora noted that the model has proved effective in other markets and could be borrowed locally to bring out the full potential of MSMes.
“I commend the banking industry’s pledge to double lending to MSMEs by providing KSh150 billion in new loans annually, beginning in 2025. Accordingly, the government will support this bold and innovative move through policy and institutional backing, including measures to guarantee the prompt payment of all pending government bills, which will commence once the ongoing verification process is completed,” said President William Ruto
“Finally, I urge the National Treasury and the Ministry of Cooperatives & MSME Development to align policies in order to provide a sustainable framework for engaging with opportunities for transformation and addressing the challenges MSMEs face in accessing credit. This will help foster the broadest inclusion of stakeholders in the financial services sector,” he added.
The 2024 Inua Biashara MSME Exhibition, hosted by the Kenya Bankers Association (KBA) brings together business owners, financial institutions, and government leaders to focus on empowering MSMEs through tailored financial solutions.
The exhibition provides an opportunity for MSMEs to engage directly with banks and access critical financial products designed to meet their needs.
