Micro, Small and Medium-sized Enterprises remain the principal engine behind Kenya’s economic growth. According to the Kenya National Bureau of Statistics (KNBS), more than 7.4 million MSMEs in the country provide employment to approximately 14.9 million Kenyans in various sectors. However, with the adverse impact of the COVID-19 Pandemic on the SME sector, coupled with pre-existing barriers, the sector faces an acute challenge in its ability to access affordable credit to sustain its operations. To address this, the National Treasury together with Central Bank of Kenya, Office of the President – SME Advisory Unit, Ministry of Trade, Kenya Bankers Association, Association of Micro Finance Institutions, donors and other stakeholders spearheaded the development of a Credit Guarantee Scheme (CGS) to promote enterprise growth by enabling access to quality and affordable credit. For the first phase of the program, the National Treasury has partnered with seven banks to implement the Scheme as a COVID response facility. With a view to dispelling any misconceptions and creating awareness about the CGS, KBA Secretariat has developed these Frequently Asked Questions (FAQs) page.
Banks are now able to disburse affordable loans faster, lend more and take on more riskier SME borrowers. Benefits of the CGS to the borrower include:
Yes, there are consequences for failure to repay the loan and for loan fraud.As stipulated in the Public Finance Management (Credit Guarantee Scheme)Regulations 2020, borrowers face prosecution of up to two years should they fail to do the following: