The national treasury plans to launch a series of soft loans for businesses as part of the relief measures. The loans are part of a new credit guarantee scheme that businesses will access through local banks.
Small businesses like barbershops will pay subsidized interests as low as 7% for the loans.
“We and our partners, including banks and institutions like the EU, will provide cash for onward lending at below seven percent,” Business Daily quoted CS Yattani. “There is also an element of guarantees for loans disbursed to small traders and coming from commercial banks.”
However, small businesses are uncertain about subsidized loans due to unpleasant experiences in the past with similar credit facilities. Moreover, uncertainty as to when the pandemic will end makes it difficult to borrow even at low-interest rates.
Yattani revealed that the treasury is working with partners like the European Union and the World Bank to guarantee loans disbursed from the banks.
“We are in talks with the government to introduce a loan guarantee scheme. This will be particularly helpful in increasing lending to small and medium-sized firms,” KCB’s Joshua Oigara confirmed.
The ministry has set aside KSh 3 billion to start the scheme, which will receive support from the European Union worth KSh 11.7 billion.
Last week, President Kenyatta spoke of boosting the economy after launching the KSh 53.7 billion stimulus package. The economic stimulus program which will benefit eight critical sectors.