President Uhuru Kenyatta’s cabinet on Thursday approved the establishment of a credit guarantee scheme targeting the Micro, Small, and Medium Enterprises (MSMEs) with an initial seed capital of KSh10 billion.
The capital will be disbursed in two tranches of KSh5 billion in the current financial year 2020/21 and Financial Year 2021/22.
In addition, Development Finance Institutions and participating commercial financial institutions are expected to boost the funding for the scheme to at least KSh100 Billion.
The scheme is expected to be operationalized by mid-October, 2020. In June, the National Treasury allocated KSh3 billion to the scheme.
In addition, the Cabinet approved the Kenya Micro and Small Enterprises Policy which aims to provide an integrated business environment for the growth and development of stable and vibrant MSEs in Kenya.
The Policy recognises the vital role played by MSEs in the economy, particularly with regard to wealth and employment creation.
In securing the market of Kenya’s produce abroad, Cabinet considered and approved the Memorandum of Understanding between the Ministry of Agriculture and the Associazione Caffé Trieste-Italy noting that it sought to enhance market access for Kenyan Coffee in Italy through a robust partnership for promoting our produce in the Italian market.
The Cabinet also noted that the move would provide a platform for similar engagements within the other European Union (EU) countries.
A survey by Kenya Private Sector Alliance(KEPSA) found that SMEs had been hardest hit by the effects of COVID-19 on the economy.
A total of 2,466 businesses that participated in the survey, 81 percent reported they have been impacted by Covid-19.
“Small and mid-sized companies reported the largest impact (high to very high) at 85 percent and 83 percent in comparison to 78 percent of micro-enterprises and 70 percent of large companies,” Kepsa said in the report.
Similarly, the Kenya Association of Manufacturers (KAM) and KPMG report on the impact of Covid-19 on manufacturers in Kenya found out that 37 percent of SMEs have scaled-down production.
On the other hand, 79 percent of surveyed companies are experiencing cash flow constraints, with 86 percent of SMEs facing the same challenge which is affecting their ability to meet tax obligations, pay employees, or pay operating costs.