Small businesses are central to the Kenyan economy as they provide jobs to nearly 15 million workers in Kenya and contribute to the national income. The SMEs have been among the hardest-hit businesses by the Covid19 pandemic. Lack of funds and low business activity are some of the challenges hurting small and medium-sized businesses.
To address these challenges, the Kenya government partnered with seven local banks as development partners like the World Bank to create the KSh 10 billion Credit Guarantee Scheme in late 2020.
Speaking during the CEO Chat hosted by the Kenya Bankers Association (KBA), Betty Korir, the CEO of Credit Bank Plc, said that the Credit Guarantee Scheme is meant to provide easy access to loans for SMEs, protect bank customers in case of default, and to boost financial stability in the banking sector in the prevailing economic environment.
“The Credit Guarantee Scheme is a noble intervention. It’s important to note that these programs are successful when all parties play their role, including the government, lenders and the borrowers,” she said.
The banking executive noted that banks have restructured 54% of the total banking loan portfolio and as a banking industry, they are committed to helping small businesses during this tough period.
Betty Korir advised SMEs to work on their corporate governance framework, meaning they make a clear separation of the management and shareholders, and keep accounts in order to benefit from the government-backed Credit Guarantee Scheme.