BUY KENYA BUILD KENYA

State to cut imported supplies, offer SMEs local tenders

Treasury to gazette items for local procurement.

In Summary

•Sh56.6 billion set aside to support Economic Stimulus Programme which will focus on keeping the food supply chains functional while promoting the use of locally produced goods and services.

•State to promote the “Buy Kenya Build Kenya” initiative.

Industrialisation CS Betty Maina demonstrates the type of face masks to be distributed during a Covid-19 briefing at Afya House on Friday, April 3, 2020.
Industrialisation CS Betty Maina demonstrates the type of face masks to be distributed during a Covid-19 briefing at Afya House on Friday, April 3, 2020.
Image: EZEKIAL AMING'A

The government will support Small and Medium Enterprises (SMEs) to supply it with locally manufactured goods as opposed to importing, Industrialization, Trade, and Enterprise Development CS Betty Maina has said.

This is by among others, riding on the 'Preferential Procurement Policy' which will ensure youth, women and persons living with disability secure government tenders.

“The government is will ensure SMEs supply goods that were previously being imported,” CS Maina said in a post-budget forum organised by Deloitte Kenya on Friday.

The Economic Stimulus Programme being put in place by government will support businesses mitigate effects of Covid-19, she said, with the Credit Guarantee Scheme helping with access to credit.

Cognizant of unemployment, the government has been pushing for policies to procure goods and services from youth-owned businesses.

Under the preferential procurement policy, it reserved 30 per cent of these expenses to be paid to enterprises owned by youth, women and the disabled.

To cushion citizens and businesses from the adverse effects of Covid-19 pandemic and to stimulate economic activity going forward, President Uhuru Kenyatta last month ( May 23) unveiled an Eight -Point Economic Stimulus Programme.

The Stimulus Programme will focus on keeping the food supply chains functional while promoting the use of locally produced goods and services, thus securing the livelihoods of daily wage earners.

National Treasury CS Ukur Yatani, during his Thursday 2020/21 budget statement, said the government has set aside Sh56.6 billion to cater for the various thematic areas of the programme.

The government is also keen to support the recovery and growth of Micro, Small and Medium Enterprises through various interventions including operationalization of the Credit Guarantee Scheme.

“In order to de-risk lending to the Micro, Small Medium Enterprises, I have set aside Sh3 billion seed capital to operationalize the Credit Guarantee Scheme,” Yatani announced.

The Scheme will enable the provision of affordable credit in an efficient and structured manner, the CS said.

“In addition to this, we are also actively engaging a number of development agencies who have shown willingness to put in additional resources to support this scheme,” he said.

To further support and enhance liquidity among enterprises, the CS has proposed to fast track payment of outstanding verified VAT refund claims and pending bills owed to businesses by allocating Sh10 billion.

This is in addition to the Sh 23.1 billion approved by parliament in April, in the Supplementary Budget, for the same purpose.

Treasury will also gazette and enforce a list of items for local procurement to promote the “Buy Kenya Build Kenya” initiative, Yatani said.

Despite their important contribution to the economy , MSMEs have 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. With reduced turnover and disruptions in the market and supply chains, many Micro, Small Medium Enterprises are unlikely to attract affordable and quality credit under the traditional arrangements,” the CS notes.

The government has since temporarily suspended listing with the Credit Reference Bureaus of any person, Micro, Small and Medium Enterprises and corporate entities whose loan account falls overdue or is in arrears.

It has also lowered turnover tax rate from three per cent to one per cent to ease tax burden for MSMEs.

The government is counting on the Economic Stimulus Programme and a ‘Post Covid-19 Economic Recovery Strategy' to stimulate economic activities, thereby culminating to a growth of 5.8 per cent in 2021 and 6.5 per cent by 2024.