More than kes 2 billion has been issued to micro, small and medium-sized enterprises (MSMEs) under the state-backed credit guarantee scheme to enable MSMEs to access to quality and affordable credit for their growth and operations.
Ukur Yatani says by December 2021, a total of 1,291 small businesses had taken loans amounting to kes 2.1 billion since the scheme was launched a year ago. The credit guarantee scheme encourages banks to disburse credit to borrowers they would otherwise turn away, confident that they will be compensated in case of defaults.
“There was a steady growth in beneficiaries through the year, with 338 facilities issued in December 2021 as compared to two facilities a year earlier,” Treasury Cabinet Secretary Ukur Yatani said in a statement.
The commercial banks that issue the loans can be compensated for up to a quarter of losses from default using the cash provided by Treasury, which now stands at kes 3 billion. The loan limit is set at kes 5 million per borrower with a repayment period of 36 months.
Small enterprises accounted for 52 percent of the beneficiaries, followed by medium enterprises (25 percent) and marginalised groups including women, youth and persons living with disabilities (23 per cent).
Of the kes 3 billion provided by Treasury, only kes 546.2 million was absorbed, with the balance of kes 2.45 billion still available to guarantee up to kes 9.8 billion in credit to qualifying MSMEs through the seven banks.
“The figure amount will go higher as repaid guarantee funds are also factored,” said Mr Yatani.
The credit guarantee scheme backed by the government adds to other facilities run by multilateral lenders and development finance institution that seeks to boost MSMEs’ access to credit for growth and working capital.
Last year, a Central Bank of Kenya study showed that banks turned away 28 percent of small businesses while microfinance institutions declined 96 percent of their loan applications.
Read also; KCB Sets Aside Ksh 800 Million to Support MSMEs in Nakuru.
