In an economy that has been battered by the Covid-19 pandemic such as ours, a State-backed credit guarantee scheme for small and medium enterprises (SMEs) is welcome, even if it only covers part of the loans.
Despite President Uhuru Kenyatta easing restrictions that had brought business activities to a grinding halt, many SMEs continue to close their doors as they struggle to access credit to jumpstart their businesses.
Banks continue to look at them as risky borrowers. But with the credit guarantee scheme that covers the banks’ perceived risks, lenders will be encouraged to loosen their purse strings and channel more credit to the small businesses. Restoring liquidity to borrowers will also be critical for the country’s economic recovery from the pandemic.
The onus is now on MPs to debate and pass the proposed law and enable the quick implementation of the scheme.
Many of the SMEs teetering towards closure don’t have the luxury of waiting as MPs take extreme positions on the Public Finance Management (Amendment) Bill 2020.
This is the time for consensus building to save the SMEs sector that employs a majority of Kenyan workers.