NAIROBI, (Xinhua) --
Kenya is in the process of putting in place a
credit guarantee scheme for small and medium enterprises (SMEs)
in order to boost economic growth, a senior government official
said on Tuesday.
Peter Munya, Cabinet
Secretary in the Ministry of Industrialization, Trade and
Cooperatives, told a trade forum in Nairobi that one of the
biggest challenges facing the SMEs is lack of access to
guarantee schemes will result in overall economic growth because
it will allow commercial banks to advance SMEs loans at a
concessional interest rate,” Munya said during the launch of the
SME FEST 2018 Success Conference.
which runs from Sept. 19 to 20 will bring together key policy
makers and over 1,000 small enterprises to network and discuss
ways to increase their role in economic development.
The SME credit
guarantee scheme will receive funding from the National Treasury
and will repay banks in case SMEs default on their loans.
He said the
government is aware of the SME’s potential to create
opportunities for employment and wealth creation.
Munya said the
government is also prioritizing the expansion of SMEs because
they contribute about 20 percent to Kenya’s Gross Domestic
Product and the bulk of employment opportunities.
Munya revealed that
small firms are vital to the economy because of their value
addition to local raw materials.
He added that Kenya
loses significant revenue through the exports of raw materials
and importation of finished goods.
secretary said that Kenya will leverage on its abundant natural
resources to develop cottage industries.
Mathew Nyamu, the
Assistant Director of Industrialization at the Policy at the
Ministry of Industrialization, Trade and Cooperatives said that
the government will develop a policy that will provide
incentives for big firms to subcontract some of their work to
liberalization of the economy has led to SMEs facing competition
from foreign industries.
“So, the best way to
protect our local firms is through enhancing their
competitiveness and efficiencies,” he added.
Kenya Association of
Manufacturers (KAM) Chairman Sachen Gudka said that President
Uhuru Kenyatta’s Big Four Agenda has highlighted manufacturing
as one of its four main pillars in the next five years.
He noted that the
manufacturers are committed to achieving the goal of increasing
their share of the national wealth to 15 percent in the next
five years and reap the accompanying benefits such as employment
The chairman added
that SMEs are the backbone of a thriving economy and are often
expected to play a prominent role in job creation in Kenya.
He observed that
SMEs represent small enterprises that cut across all sectors of
the economy and provide one major source of employment second to
the agricultural sector.