Jua Kali businesses face credit hurdle in covid recovery path

Lack of affordable credit may hurt recovery of informal businesses from the Covid-19 economic fallout, a lobby has warned.

The Kenya National Federation of Jua Kali Association CEO Richard Muteti said its members had run into deep liquidity challenges owing to disruptions caused by government lockdown measures to curb the spread of the virus.

“One of the biggest challenge that has never been cracked in this country is access to affordable credit,” Mr Muteti said.

“The first line of people that were hit by the Covid-19 pandemic were the micro small and medium enterprises(MSMES), especially in the informal sector. It was so bad that in the first two days cash flows started evaporating. While people were talking about meeting resilience, our people were talking about survival.”

Kenyan MSMEs face hurdles such as high cost of repayment, strict collateral requirements, high credit facilities’ processing fees and short repayment period while accessing credit facilities from various financial institutions.

“There is no little money for an MSME. We could be talking about millions. For an MSME, Sh5,000 or Sh10,000 can restock a business, ” said Mr Muteti.

Besides the credit, Mr Muteti said the small businesses also had to contend with work site challenges, with most operating from poorly built structures that post safety risks.

“I am happy now that boda boda (operators) have stages across the country, small traders have markets and recognition of the Jua Kali sector through workshops,” Mr Muteti added.

He was speaking last week when the Kenya National Chamber of Commerce and Industry (KNCCI) and the Mastercard Foundation began disbursement of Sh600 million interest-free loans earmarked for youth and women-led small businesses.

The loans are part of the Covid-19 Recovery and Resilience Programme.