How to make State credit guarantee scheme work for small businesses
Tuesday, May 26, 2020 0:01
By VICTOR OTIENO |
Kenya is a very attractive destination to these investors.
The government announced a raft of measures in 2019 that were meant to alleviate the challenges of the SMEs such as repeal of interest rate cap, payment of pending bills, setting up of an SME fund, a credit guarantee scheme, amendment of the competition law and establishing warehouses in free trade zones in East African countries.
The government has announced a second stimulus package to enhance liquidity of SMEs with an additional Sh13 billion split between fast-track of VAT refunds, payment of outstanding pending bills and seed capital to operationalise the SME credit guarantee scheme.
First the scheme must be inclusive, bringing on board other SME and start-up investors such as angel investors, venture capitalists and private equity players from the supply side.
From the demand side the credit guarantee scheme must not only include SMEs but also start-ups — businesses that are founded on technology and have a higher probability of rapid growth over a short period of time as compared to SMEs.
