The State has announced plans to increase the Credit Guarantee Scheme (CGS) capital for SMEs from the current KSh4 billion to KSh10 billion over the medium term.
While presenting the KSh3.3 trillion budget, CS Ukur Yattani allocated KSh10.1 billion shillings to support local industries and their ongoing projects in the manufacturing sector.
Out of this, KSh1 billion will go to the Credit Guarantee Scheme to enhance access to affordable credit by SMEs in the Manufacturing industry. Another KSh626 million will go to the provision of finances to SMEs through Kenyan Industrial Estate.
In 2021, banks disbursed a total of KSh2.11 billion to support 1,291 MSMEs through the state-run Credit Guarantee Scheme. In the 2020/21 financial year, the state had set aside KSh3.0 billion to the scheme, allowing lenders to disburse at least KSh12 billion to business entities that meet the cut.
Only seven commercial banks are involved in the CGS; 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. It targets entities that would otherwise be unable to raise the required collateral for such loans and face an uncertain and risky business environment.
See Also:
