State to boost SMEs as key pathway to economic recovery

President William Ruto. [Kelly Ayodi, Standard]

The government will provide resources annually to enable small business access credit.

The first Budget Policy Statement (BPS) under President William Ruto also touts the Hustler Fund as one of the working initiatives by the government aimed at uplifting small business owners.

It describes the fund as an intervention that aims to correct market failures that have hindered micro, small and medium enterprises (MSMEs) from accessing affordable credit.

Nevertheless, the administration plans to use the available vehicles in the market to improve credit access to small businesses.

This is according to the published Draft 2023 Budget Policy Statement prepared by National Treasury Cabinet Secretary Njuguna Ndung'u.

The document emphasises the government's commitment towards making available affordable credit to Kenyans.

"Towards this end, the government will commit resources every year to provide MSMEs with access to funds towards Saccos, venture capital, equity funds and long-term debt for start-up and growth-oriented SMEs," reads the statement.

MSMEs, alongside agriculture, housing and settlement, healthcare, digital superhighway and creative industry are the five sectors identified by the Kenya Kwanza administration as the pathways towards economic recovery and inclusive growth.

These are the areas the government seeks to increase investments in.

The policy statement does acknowledge the challenging times the country's economy is in in relation to the rest of the world, citing skewed access to finance for business and development as an addition to the global shocks the nation has to deal with.

Even so, it is the expectation of the Kenya Kwanza administration that access to credit for MSMEs will stimulate growth.

The statement notes that MSMEs contribute significantly to the economy by employing 85 per cent of non-farm jobs.

"However, high interest rates crowd out the private sector and the MSMEs," the statement reads.

One of the initiatives that the government is banking on is the introduction of Hustler Fund as an intervention to provide credit to those at the bottom of the pyramid.

"This programme aims to lift those at the bottom of the pyramid through structured products in personal finance that includes savings, credit, insurance and investment," the BPS says.

"Other interventions by the government will include ending criminalisation of work of enterprises such as hawkers by enacting a right to work law, making trading licences affordable and provide a trading location entity to every citizen or MSME who applies," the statement adds.

This, the government hopes, will create a favourable business and enterprise environment, decriminalise livelihood and support people in the informal sector to organise them into a stable, viable and creditworthy business entities.

County governments have also been roped in and in partnership with the national government will create frameworks that provide secure trading places in cities and towns.

"To enhance MSMEs infrastructure and capacity building, the government will establish MSME business development centre in every ward," the BPS says.