SMEs bag Sh3.3bn under State credit guarantee programme


The National Treasury building in Nairobi. FILE PHOTO | NMG

A total of 2,190 small and medium enterprises received Sh3.3 billion under the State-backed credit guarantee scheme in the year to June 2022, as the government’s plan to derisk small traders took off at a slow pace.

The National Treasury says enterprises owned by the disabled, youth and women received Sh472.2 million or 20.1 percent of the total disbursements through the Credit Guarantee Scheme (CGS).

But the disbursements are still a drop in the ocean for a country that boasts of more than seven million micro-small- and medium-sized enterprises (MSMEs).

The credit guarantee scheme encourages banks to disburse credit to borrowers they would otherwise turn away, confident that they will be compensated in case of defaults.

The Treasury data tabled in Parliament said women beneficiaries of the CGS were 283, youth beneficiaries were 150 and persons living with disabilities (PWDs) were eight.

“However, in terms of the value of credit guarantees the portion extended to enterprises owned by women, youth and PWDs was 14.2 percent, suggesting that this category of borrowers receive on average smaller volumes of credit facilities,” states the report.

The fund was established in December 2020 to enhance access to quality and affordable credit for growth and operations of MSMEs, which would otherwise find it difficult to access loans from commercial lenders.

A select group of commercial banks issue the loans and can be compensated for up to a quarter of losses from default using the cash provided by the Treasury.

The seven participating lenders are Absa, Credit Bank, KCB Group, NCBA, Diamond Trust bank, Stanbic Bank and Cooperative bank.

The loan limit is set at Sh5 million per borrower with a repayment period of 36 months.

“The National Treasury will continue working with private finance initiatives (PFIs) in order to increase the number of beneficiaries from these categories [women, youth and PwDs], an annual performance report on MSMEs Credit Guarantee Scheme states.

“Further, the National Treasury will continue with its efforts in collaboration with relevant agencies to do capacity building with this category of beneficiaries.”

The report shows that all three sizes of enterprises — micro, small and medium — have benefited from the CGS as reported through banks and the Central Bank of Kenya.

The Treasury said of the 2,190 facilities issued under the CGS in the financial year 2021/22, small enterprises received 1321, medium enterprises received 248 and micro-enterprises got 561.

“In terms of the value of facilities, small enterprises received Sh2.29 billion, medium enterprises (Sh592.5 million) while micro-enterprises received Sh431.9 million,” said the Treasury in the report.

It attributed the proportion of credit guarantees allocated to micro-enterprises to the average size of their loans being smaller than either small or medium enterprises.

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