SMEs among Top Beneficiaries of the Economic Stimulus Package in the 2020/21 Budget

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Finance CS Ukur Yatani yesterday read his maiden budget for the year 2020/21 in parliament in a low key event that was attended by a handful of guests. Inside the Ksh 2.7 Trillion budget, billions were channelled towards the fight against COVID-19 pandemic, as the rest was allocated to other key sectors affected by the virus including, health, education, tourism, agriculture among others.

In his speech, CS Ukur introduced the 8-Point Economic Stimulus Programme that the Government will be implementing to stimulate and sustain economic activities. He noted that this Economic Stimulus Programme targets to cushion vulnerable citizens and businesses, particularly those affected by the Covid-19 Pandemic. The Stimulus Programme will focus on keeping the food supply chains functional while promoting the use of locally produced goods and services, thus securing the livelihoods of daily wage earners. His Ministry set aside Ksh 56.6 billion to cater for the various thematic areas of the Programme.

Among those targeted in the programme were SMEs who have been adversely affected by COVID-19 pandemic. To enhance liquidity for SMEs the government noted that it has set aside some seed capital to operationalize the Credit Guarantee Scheme.

“Despite their important contribution, this sector has continued to face challenges of accessing credit, due to lack of sufficient collateral; high cost of credit and informal business structure. These challenges have been worsened by the Covid-19 Pandemic. With reduced turnover and disruptions in the market and supply chains, many Micro, Small Medium Enterprises are unlikely to attract affordable and quality credit under the traditional arrangements.

“Mr Speaker, in order to de-risk lending to the Micro, Small Medium Enterprises, I have set aside Ksh 3.0 billion seed capital to operationalize the Credit Guarantee Scheme. The Scheme will enable the provision of affordable credit in an efficient and structured manner. In addition to this, we are also actively engaging a number of Development Agencies who have shown 24
willingness to put in additional resources to support this Scheme,” said CS Ukur.

To further support and enhance the liquidity of these enterprises, he proposed to fast track payment of outstanding verified VAT refund claims and pending bills owed to businesses by allocating Ksh 10.0 billion. The amount adds to adds Ksh 23.1 billion approved the House in April 2020 in the Supplementary Budget for the same purpose.

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