State mulls over credit guarantees for MSMEs
About 2.2 million businesses shut down in the last five years for lack of operational funds and lengthy regulatory processes
The government might introduce credit guarantees and other forms of subsidised financing for the dominant micro, small and medium enterprises to promote their growth.
The plan was revealed yesterday by Devolution Cabinet Secretary Mwangi Kiunjuri during the launch of the 2016 Micro, Small and Medium Establishments Survey Basic report by the Kenya National Bureau of Statistics.
The CS said the government will adopt new creative and innovative financing strategies focusing on the uniqueness and peculiarity of each of the SMEs business.
“Credit guarantee schemes is one of the approaches that will be considered,” he said in a speech read on his behalf by Principal Secretary Saitoti Torome.
Difficulty in credit access has resulted in high mortality rate of MSMEs, dampening their growth in the sector and limiting its contribution to the economy.
The report revealed that about 2.2 million businesses shut down in the last five years due to lack of operational funds and lengthy regulatory processes.
The KNBS said the regulatory environment is challenging for the MSMEs due to the requirement of multiple licences.
“There is also interference from authorities, taxes are high and crippling.”
According to the KNBS, the value of MSME output was estimated at Sh3.37 trillion against a national output of Sh9.97 trillion in 2015, representing a contribution of 33.8 per cent.
In terms of gross value added, the MSMEs are estimated to have contributed Sh1.61 billion in 2015, compared to Sh5.67 trillion for the whole economy.
The findings show total employment was approximately 14.9 million in the MSMEs, with Nairobi recording the highest proportion of employment.
The CS said other areas for government intervention in the MSMEs include upgrading transport systems, providing affordable electricity, water, sewerage, security and telecommunications. He said the government will strengthen its partnership with the private sector and boost coordination among various government entities
Ministry of Planning and Statistic PS Saitoti Torome shares the report with Micro and Small Enterprises Authority chief executive Patrick Mwangi at the launch of the SMEs report in Nairobi yesterday