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 Star (Kenya) - - News Business - RICHARD MUNGAI @Richiy­mungai

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

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