- The government aims to enhance access to credit by mid-October for small businesses, which are in financial crisis.
- The pandemic has taken a toll on businesses, lowering the GDP and worsening unemployment.
The Cabinet has approved the establishment of a credit guarantee scheme for micro, small and medium enterprises.
The scheme is part of government's interventions to cushion MSMEs from the effects of the Covid-19 pandemic.
The decision was arrived at in a meeting chaired by President Uhuru Kenyatta on Thursday.
The government aims to enhance access to credit by mid-October for the financially constrained small businesses.
The pandemic has taken a toll on businesses, lowering the GDP and worsening unemployment. It is estimated at least 1.7 million have lost jobs during this period.
The Central Bank of Kenya in May warned that at least 75 per cent of SMEs risk closure for lack of funds.
The scheme will commence with an initial seed capital of Sh10 billion to be released in two tranches of Sh5 billion in 2020-21 and 2021-22.
Development financial institutions and participating commercial financial institutions are expected to boost the state's contributions to least Sh100 billion.
The Cabinet also approved the Kenya Micro and Small Enterprises Policy, which aims to provide an integrated business environment for the growth and development of stable and vibrant MSEs.
President Kenyatta in April announced a Sh3 billion SME credit guarantee scheme as part of a stimulus package to resuscitate the economy.
SMEs were also targeted in the Sh10 billion allocated to the Kenya Revenue Authority for outstanding Value Added Tax refunds.
The Jubilee administration also released to banks Sh35.2 billion in March after the CBK lowered the cash reserve ratio.
Edited by Josephine M. Mayuya