This archive report was first published on 21 May 2020.
On May 21, 2020, the Senate Ad Hoc Committee on coronavirus pandemic proposed a liquidity support package for Micro, Small and Medium-sized Enterprises (MSMEs) that are tax-compliant.
The committee is pushing for the publication of the regulations establishing the Micro and Small Enterprises Development Fund by the Industrialization, Trade, and Enterprise development Ministry, so as to allow its operationalization.
MSMEs in trade, agriculture, tourism, and retail are the worst hit by the COVID-19 pandemic, according to the committee.
President Uhuru Kenyatta had promised an SME credit guarantee scheme in April to exempt them from complex application procedures and collateral requirements during application for loans.
Other economic stimulus interventions announced by President Uhuru Kenyatta include tax relief to mitigate the effects of COVID-19. Parliament approved the following measures:
- Removal of income tax for all persons earning a gross monthly income of less than KSh24,000
- Reduction of the Turnover tax rate from 3% to 1%
- Reduction of PAYE (Pay-As-You-Earn) tax from 30% to 25%
- Reduction of VAT from 16% to 14%
- Reduction of resident corporate income tax from 30% to 25%
The International Monetary Fund (IMF) has projected that Kenya’s economy will grow at a rate of 0.8 % in 2020 against the National Treasury’s estimate of 3%. The World Bank says Kenya’s GDP growth could hit below 0.2%.
