Businesses are yet to fully tap tap into the government backed - Credit Guarantee Scheme, official data shows, amid calls to utilise the kitty.
The government is working with local banks in implementing the scheme established by the National Treasury in December 2020, to support Micro, Small and Medium Enterprises (MSMEs) to access quality and affordable credit.
This was during the Covid-19 and post-pandemic period.
Participating commercial banks are implementing the scheme using their own liquidity, existing branch networks and infrastructure allowing them reach out to MSMEs across the country.
They are Absa, Credit Bank, Diamond Trust Bank, KCB, NCBA, Stanbic and Cooperative Bank.
Fresh data by the National Treasury indicates as of end of March, only Sh4.64 billion had been accessed.
This is about 38 per cent of the scheme’s potential of Sh12 billion available to MSMEs, meaning about Sh7.36 billion remains untapped.
“The government, therefore, encourages qualifying MSMEs to approach participating banks and access these facilities to grow their businesses,” National Treasury and Economic Planning Njuguna Ndung’u said in statement on Tuesday.
The disbursed amount so far is on 2,997 facilities which span across 46 counties.
Small enterprises had received 57 per cent of the facilities, micro enterprises received 29 per cent, while medium enterprises had received 14 per cent.
About 22.1 per cent of the total guaranteed facilities so far have been issued to enterprises owned by women, youth and persons with disabilities.
“So far, CGS has supported 18,770 jobs directly,” Ndung’u noted.
About 1,005 facilities have been fully repaid releasing Sh1.23 billion for borrowing by other qualifying MSMEs.
The facilities are distributed in 12 different sectors of the economy.
Treasury’s call comes at amid a shift in commercial banks lending trends, where there has been a shift towards market segments previously deemed risky, such as the MSME space.
Banks have invested heavily in product innovation and risk management to provide variety and flexibility in product design, resulting in relevant financial services to MSMEs.
Central Bank of Kenya latest Banking Sector Annual Report (2022) indicates there were 1.18 million active MSME loan accounts in the banking industry as at December 2022, with a total value of Sh783.3 billion.
This was a 29 percent increase from 915,115 active loan accounts valued at Sh638.3 billion as at the last MSME lending survey in December 2020.
Of this total, commercial banks, and mortgage finance companies, cumulatively, disbursed Sh750.3 billion (96 percent) while micro-finance banks disbursed Sh32.98 billion (4 percent).
The proportion of the MSME loan portfolio to the total banking sector loan book as at December 2022 stood at 21.3 per cent compared to 20.9 per cent as at the end of 2020.
Lending to MSMEs generated Sh105.1 billion for the banking industry, representing 24.4 per cent of the total income generated from lending by the banking industry.
