This archive report was first published on 12 June 2020.
On June 12, 2020, the Kenyan government allocated Sh3 billion to operationalize the SME Credit Guarantee Scheme, a move aimed at providing affordable credit to small and medium enterprises.
The allocation was announced by Treasury Cabinet Secretary Ukur Yatani while presenting the Sh2.79 trillion budget for the financial year 2020/2021.
According to Yatani, the scheme will enable the provision of affordable credit to small and medium enterprises in an efficient and structured manner, addressing the challenges they face in accessing credit due to lack of sufficient collateral, high cost of credit, and informal business structure.
“Despite their important contribution, this sector has continued to face challenges of accessing credit, due to lack of sufficient collateral, high cost of credit and informal business structure. These challenges have been worsened by the Covid-19 Pandemic,” Yatani said.
Yatani also revealed that the Ministry is actively engaging a number of Development Agencies who have shown willingness to put in additional resources to support this scheme.
However, experts have argued that the allocated amount may not be enough to sustain the sector, with Ernest and Young Tax Expert Simon Njoroge stating that the money currently available for SMEs will not be sustainable.
