The National Treasury plans to increase the Credit Guarantee Scheme capital for Micro, Small and Medium Enterprises from the current KSh4 billion to KSh10 billion over the medium term.
While presenting the KSh3.3 trillion budget, Kenya’s Finance Minister 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 KSh 626 million will go to the provision of finances to SMEs through Kenyan Industrial Estate.
“To enhance coverage of the Scheme, additional Participating Financial Intermediaries will be brought on board. Further, the Government will seek the support of development partners to increase the scheme’s capital from the current Ksh 4 billion to Ksh 10 billion over the medium term,” Yattani said.
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.
The Credit Guarantee Scheme has been operational since December 2020. The scheme is one of the government’s incentives to mobilise private sector capital towards development goals.