The National Treasury and local banks have signed a Ksh35 billion credit facility deal to bail out small and medium enterprises (SMEs) that have been affected by the Covid-19 pandemic.
The deal will see the government contribute Ksh3 billion to the kitty while the lenders will contribute over Ksh20 billion. The European Union has committed €100 million (Ksh11.7 billion).
Credit score for most SMEs have been affected downwards since the pandemic hit the country in March, hence they might not get loans from lenders under the traditional arrangement, according to National Treasury Cabinet Secretary Ukur Yatani.
“This is in line with best practice in other regions where credit guarantee schemes have been used successfully to improve access to credit by MSMEs,” Yatani said.
Read: Safaricom Announces Support Framework for SMEs in Twende Tukiuke Campaign
SMEs seeking to access the credit facility must be employing between 50 and 250 persons and having a turnover not exceeding Ksh150 million.
The MSME sector is arguably the biggest employer in the country, employing about 14.9 million persons as of 2015 according to the National MSME survey conducted in 2016.
According to the Kenya Private Sector Alliance (Kepsa), there is a Ksh1.9 trillion financial gap and a potential demand of Ksh2.4 trillion.
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