Micro, Small and Medium Enterprises (MSMEs) are the lifeblood of Kenya’s economy, they account for more than 80 per cent of all businesses in Kenya, create around 75 per cent of the jobs. But in the tough economic times, they have suffered many challenges, which has reduced their competitiveness and crippled their growth and sustainability.
Hence they end up contributing only 30 per cent of the country’s gross domestic product (GDP), a clear indicator that their full potential is far from being attained. Today, President Uhuru while addressing the public from state house in Mombasa, announced that his government is putting several measures in place to re-start this powerful engine of our economy.
Increasing access to affordable credit
In November last year, the interest rate cap law was scrapped to facilitate the availability of more credit to businesses. Measures to enable MSMEs to access affordable credit include the recently launched Stawi, which provides unsecured credit to MSMEs since their informal nature and lack of collateral securities, has made them get locked out of the formal credit market.
Although Stawi has been touted to be the magic bullet to financial constraints, the grass on the other side requires some serious watering, as some terms and conditions are limiting.
10 Billion worth loan from Commercial Banks
Since the removal of the interest cap loan in November to facilitate the availability of more credit to businesses which will, in turn, increase the circulation of money, President Uhuru informed the public that commercial banks have set aside 10 billion shillings to be lent to MSMEs at an interest rate of 9 per cent per annum. These loan amounts ranging between 30, 000 to 250,000 shillings.
Central Bank was urged to utilize the full range of instruments of regulation and policy at its disposal to prevent predatory lending and ensure that banks can offer loans at affordable interest rates.
MSMEs should look forward to rubbing shoulders with the government in the construction industry to provide doors and windows for the affordable housing programme.
In line with one of the recommendations for policy change in the Building Bridges report, the government noted that Biashara Centres will be established across the country to provide a huduma type of one-stop-shop to provide business development services under one roof. The first Biashara Centre is fully functional at Kariobangi in Nairobi.