The government is really opening its eyes to micro, small and medium enterprises MSMEs as it has witnessed the critical role they have been playing in wealth and employment creation. Well, the 2019/2020 financial budget as read by CS Henry Rotich, brought good tidings for them.
Limited access to credit, entrepreneurial skills, and markets, as well as a cumbersome regulatory and working environment, was a major challenge in this sector. The government came into supporting MSMEs through various affirmative action funds like the Uwezo Fund, Youth Enterprise Development Fund, and Women Enterprise Development Fund. But yet there have been constraints to accessing the funds.
In the Finance Bill 2018, CS Henry Rotich amended the Banking (Amendment) Act, 2016 by repealing section 33B of the Act motivated by the need to enhance access to credit and minimize the adverse impact of the interest rate capping on credit growth.
In the 2019/2020 Budget, he proposed to repeal a Section of the Banking Act, to optimize lending to the private sector address shortcomings in the credit market.
“Mr. Speaker, given the challenges that MSMEs are facing in accessing credit from the banking sector and conscious of the need to spur business activities, I am in this year’s Finance Bill proposing a repeal of section 33B of the Banking (Amendment) Act, 2016. I am convinced this will unlock credit to the private sector and in particular to the MSMEs,” he said.
He mentioned that the government will be launching an “SME Credit Guarantee Scheme” in a few weeks’ time, to deepen access to credit by SMEs without being subjected to complex application procedures and collateral requirements. Together with Biashara Kenya Fund, the two will help catalyze provision of credit to support the Government’s “Big Four” Plan.
Biashara Kenya Fund a consolidated the three Funds establish to increase efficiency and eliminate overlaps will give special priority to businesses owned by youths, women, and people living with disabilities. The newly endorsed mobile loan product, Stawi loans that offer unsecured loans to small enterprises is among the government products established to help SMEs.
