Central Bank of Kenya (CBK) Governor Patrick Njoroge, citing an April study by McKinsey, recently warned that three quarters of the country’s MSMEs could fold by the end of June without optimal support by actors.
The economic rescue package, however, addresses the looming challenges by, among others, setting aside Sh3 billion as seed money to support the creation of a Treasury-backed SME credit guarantee scheme which will support further liquidity to local businesses.
Data from the 2020 Economic Survey by the Kenya National Bureau of Statistics (KNBS) put jobs from the informal sector at 15.1 million or 83.4 percent of employment in the country.
To ensure the continuity of the SMEs in the country, commercial banks, State agencies and development partners must now shore up funding for the credit guarantee scheme for the preservation of not just small businesses but the economy at large.
Additional funds released for onward lending to SMEs from the lowering of the commercial banks cash reserve ratio (CRR) to 4.25 percent in March hit Sh29.1 billion at the end of April out of a possible Sh35.2 billion.
