Authority wants State to recall Sh4.8b from banks

By Nicholas Waitathu

KENYA: Micro and Small Enterprise Authority (MSEA) want the Treasury to recall the Sh5 billion revolving fund established two years ago by the Treasury and channeled to commercial banks.

The Authority claims that now that a new Authority has been formed with a specific mandate of addressing the issues of small traders, the Government ought to recall the Sh4.8 billion given to various commercial banks so that the money can be used to establish a new fund. 

“We have prepared a robust plan to present to the Treasury soon with the view to requesting for the funds to establish the Micro, Small and Medium Enterprises Fund,” Chairman of the new Authority, Billy Muhia Ngugi, said.

In the 2010/2011 and 2011/2012 financial years, the Minister for Finance appropriated Sh3.8 billion and Sh1 billion respectively to banks — including Equity Bank, Cooperative Bank of Kenya and K-Rep Bank — for onward lending.

However, because Banks were offering the funds at current market rates, stakeholders accused the Government of contradicting the spirit to provide soft loans to small-scale traders.

Demand back

“Treasury ought to demand back the money from the banks so that it can be rechanneled through the Authority. The money had a component of Sh800 million for capacity building of the MSEs,” Ngugi said on phone yesterday.

Ngugi said his Authority would advance loans to small traders at competitive rates and better than what the commercial banks are offering at the moment.

But banks are expected counter the move by improving product development and perhaps lowering their lending rates so as to retain the mandate. The Authority acting CEO, Patrick Mwangi, explained that Authority wanted to create revolving and sustainable fund where traders can be financed regularly.

Owing to sound management the authority is expected to embrace, Mwangi said small traders association would be registered, monitored and exposed to new business realities.

Boost capacity

“Our idea as an Authority is to boost the sector capacity to be able to create sustainable employment for the over 750,000 Kenyans entering the labour market annually. Further the intention is to ensure MSEs are highly prioritised in the national economy management,” Mwangi said.