Treasury targets Sh36b to save SMEs from collapse

Tuesday, June 16th, 2020 00:00 |

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BUDGET: National Treasury will pump in over Sh36 billion into the small and medium enterprises (SME) sector in the next financial year, the budget statement shows.  

Businesses in this sector have been hit hard by Covid-19 with Central Bank Governor, Patrick Njoroge, warning recently that 75 per cent of SMEs risked collapsing if they failed to get funds from banks and equity partners by the end of this month.

To help the sector navigate the challenges, Treasury has come up with several interventions, most of them falling under the third theme of the Sh56.6 billion Economic Stimulus programme.

Containment measures

Presenting the 2020/21 budget before Parliament, Treasury Cabinet Secretary Ukur Yattani said both the pandemic and containment measures put in place to address it had disrupted the business environment leading to loss of livelihoods.

“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,” he said.

“With reduced turnover and disruptions in the market and supply chains, many micro, small and medium enterprises (MSMEs) are unlikely to attract affordable and quality credit under traditional arrangements,” Yatani said, adding that the government has set aside Sh3 billion seed capital to facilitate the Credit Guarantee Scheme for efficient provision of affordable credit to MSMEs.

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