Cabinet approves credit guarantee scheme for small businesses hit by Corona

President Uhuru Kenyatta chairing Thursday meeting (PHOTO: PSCU)

NAIROBI, KENYA: The cabinet has approved a credit guarantee scheme targeting the Micro, Small and Medium Enterprises (MSMEs) during the COVID-19 period.

The scheme will have an initial seed capital of Sh10 billion to be capitalised in two tranches of Sh5 billion in the financial year 2020/21 and Financial Year 2021/22.

The State’s contributions are expected to be followed by contributions from Development Finance Institutions and participating commercial financial institutions; which are expected to boost the finding for the scheme to at least Sh100 Billion. The Credit Guarantee Scheme is expected to be operationalised by mid-October, 2020.

In May this year, the Central Bank of Kenya warned that the sector have thin buffers hence need for support through such schemes.

“MSMEs don’t have a lot of buffers. They generally would die quickly,” said Patrick Njoroge, CBK Governor. He cited a survey which showed that three-quarters of SMEs do not have cash that could last them long beyond end of the year.

In other developments during the Cabinet meeting on Thursday, towards realisation of the agenda on Affordable Housing, Cabinet approved the implementation of the Mukuru Social Housing Project, the first social housing programme in Kenya’s history. The Project, with an estimated investment value of Sh15billion, will consist of over 13,000 housing units in a partnership between the Government and private investors. The development of the ancillary infrastructure to the project has since commenced.

Cabinet approved the Kenya Micro and Small Enterprises Policy; which aims to provide an integrated business environment for the growth and development of stable and vibrant MSEs in Kenya. The Policy recognises the vital role played by MSEs in the economy, particularly with regard to wealth and employment creation.

In securing the market of Kenya’s produce abroad, Cabinet considered and approved the Memorandum of Understanding between the Ministry of Agriculture and the Associazione Caffé Trieste-Italy noting that it sought to enhance market access for Kenyan Coffee in Italy through a robust partnership for promoting our produce in the Italian market. Cabinet also noted that the move would provide a platform for similar engagements within the other European Union (EU) countries.

In order to foster the commercialisation of Bamboo plants, and as part of the Administration’s Greening Campaign, which seeks to achieve a minimum ten-percent (10 per cent) tree cover by the end of the year 2020 in addition to creating employment through agroforestry; Cabinet sanctioned the classification and designation of Bamboo as a scheduled crop under the Crop Act (No. 16 of 2013).

In fidelity with the Presidential Directive on the development of a welfare package to cushion frontline healthcare workers during the pendency of the COVID-19 Pandemic, Cabinet approved the enhancement of the Group Personal Accident and Work Injury Benefit Act Cover and the inclusion of Comprehensive Group Life Cover for all Civil Servants, including the NYS.

The meeting also considered and approved the other memoranda, policies and bills as follows: Hosting of the 9th Edition of Africities Conference in 2021; Industrial Research Development Institute Bill, 2020, Proposed Health Laws (Amendment) Bill, 2020; Development of the Commuter Rail Line from the Nairobi Central Station to Jomo Kenyatta International Airport and The Kenya Global Partnerships for Education (GPE) Covid-19.

Cabinet concluded the day’s deliberations by noting that Kenya’s national endeavor to flatten the COVID-19 disease curve was dependent on individual and communal behaviour. In that regard, Cabinet urged all Kenyans to continue observing the guidelines and protocols issued by the Ministry of Health, which include: wearing of facemasks, rigorous and frequent handwashing, physical and social distancing.