The 2019/20 budget aims at promoting the growth of Small and Medium-sized Enterprises (SMEs), while cushioning the poor from high taxes, Treasury Cabinet Secretary Henry Rotich has said.
Mr Rotich was speaking during a post-budget Press conference at Parliament Buildings yesterday.
According to Rotich, plans are underway to create a bank that will lend to the SMEs.
Also, the Banking Act is to be amended to remove the controversial interest rate cap clause, to encourage banks to lend to SMEs.
Rotich said the Government aimed to clear pending bills owed to SMEs.
Youth who engage in online work, and are able to hide behind the anonymity of the internet, will now be required to pay a flat rate of Sh1,000 to an Ajira fund that is to be set up in lieu of the taxes.
The money, according to the Treasury CS, will be used to fund projects that will benefit marginalised groups, especially the youth.
"The budget tries to build on current successes and to address challenges facing small businesses. Lending to SMEs will be encouraged," Rotich said, adding: "The SMEs need to maintain macro-economic stability through the deepening of reforms in the business sector.”
On removing the contested caps on interest rates, the CS said: “The intention of Parliament was to lower credit but we have seen the opposite effect. It is high time we addressed this issue because credit to the private sector is growing at between 4 and 5 per cent. The caps on interest rates has ended up having a negative effect.”
He said all pending bills owed to startups both at the county and national government level would be cleared by the end of the year.
Even as Treasury struggles to create a balance between revenue and protection of SMEs, it will be banking heavily on reforms at Kenya Revenue Authority to improve on the proceeds to the national purse and deliver on projects under the Big Four agenda.
“Kenya Revenue Authority is being reformed and we expect better and more efficient service to do away with shortfalls experienced in the past,” said Rotich.
He was accompanied by Treasury PS Kamau Thugge.
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