The Treasury says it will speed up a new scheme aimed at unlocking credit to the small and medium-sized enterprises (SMEs).
National Treasury in May last year said it would guarantee commercial bank loans to SMEs as part of an effort to reduce the risk profile, keep loan prices low and to ease access to credit.
“To enhance access to credit, the government will expedite the development of a credit guarantee scheme, which will enhance access to credit by micro, small and medium enterprises and marginalised groups and regions.
“In view of this, the government will finalise the policy on credit guarantee scheme to provide a framework to guide structured implementation and development of a vibrant credit guarantee scheme that embraces a public-private partnership structure,” Treasury secretary Henry Rotich says in the just-released 2019/20 Budget Policy Statement.
Under the proposed credit guarantee scheme, the Treasury will provide third-party credit risk mitigation to the banks by absorbing a portion of losses on SME loans in the event of default.
Mr Rotich also said Treasury would fast-track the implementation of a law allowing borrowers to use household goods, crops, live animals and even intellectual property to secure commercial loans in a move aimed at boosting access to credit.
The law President Uhuru Kenyatta signed in 2017 paved the way for the formation of a centralised electronic registry for mobile assets that financial institutions can use to verify the offered security.
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