Credit Guarantee Scheme for MSMEs Receives Cabinet Approval

It is a sigh of relief for many cash-strapped micro, small and medium-sized enterprises (MSMEs), presently struggling to remain afloat.

This follows cabinet approval of plans to set up a credit guarantee scheme to support these businesses, most of them severely battered by effects of the coronavirus pandemic.

This credit scheme will commence with an initial seed capital of KSh10 Billion to be released in two tranches of KSh5 billion in the financial year 2020-21 and 2021-22.

Financially distressed enterprises could access these funds as early as the middle of October. In the 2020/21 National Budget estimates, Treasury set aside KSh 3.0 Billion seed capital to operationalize this Credit Guarantee Scheme.

The scheme will enable small businesses to access affordable credit in an efficient and structured manner.

Treasury Cabinet Secretary Ukur Yatan.

The micro, small, and medium-sized enterprises often face challenges in accessing credit due to lack of sufficient collateral, costly credit and their informal nature.

With coronavirus disruptions kicking in, SMEs’ financial woes have worsened with many shutting down or shedding off workers in order to stay afloat.

Treasury has been engaging a number of Development Agencies who have shown willingness to put in additional resources to support this Scheme.

It has also fast tracked clearance of VAT refund claims so as to enhance the liquidity of these micro, medium and small enterprises.

In this year’s budget, Treasury allocated KSh 10.0 billion in addition to KSh 23.1 billion approved by Parliament in April 2020 in the Supplementary Budget, for purposes of clearing pending bills.

The 2021 budget has also allocated KSh 712 Million to provide credit to micro, small and medium enterprises (MSMEs) in the manufacturing sector. This is in addition to KSh 800 million for the development of various MSMEs.

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