Local banks commit Ksh.450B to support MSMEs

Nairobi,

Wednesday, 16 October, 2024 

McCreadie Andias, 

Kenyan banks have committed KES 450B to support MSMEs over the next 3 years. 

The commitment was made by the Kenyan Bankers Association during the 2024 Inua Biashara MSME Summit and Exhibition officially presided over by President William Ruto on Wednesday at KICC, Nairobi.

MSMEs have been recognized as bigger players in Kenya's economic arena contributing to atleast 80 - 90 % of Employment and accounting to nearly a third of Kenya's Gross Domestic Product (GDP). 

The MSMEs sector has hence been poised to drive more economic growth and create more employment for youths under the right conditions. 

President William Ruto committed to fostering MSME growth as part of his government's broader economic development agenda.

The Inua Biashara MSME Expo focuses on promoting MSMEs growth through delivery of financial literacy programmes to players in the MSME sub-sector whilst creating shared value through partnerships that drive business development, job creation, and economic growth.

The platform strengthens engagement between MSMEs and the banking sector, where banks stand as a catalyst to the growth, innovation, and long-term sustainability of MSMEs. 

President Ruto challenged the banking sector to use technology to design innovative credit products that meet the needs of small and medium-sized businesses.

The President urged the National Treasury and the Ministry of Cooperatives & MSME Development to align policies in order to provide a sustainable framework for engaging with opportunities for transformation and addressing the challenges MSMEs face in accessing credit, noting that this will help foster the broadest inclusion of stakeholders in the financial services sector.

Ruto commended the banking industry's pledge to double lending to MSMEs by providing KSh150 billion in new loans annually, beginning in 2025 stating that the government will support this bold and innovative move through policy and institutional backing, including measures to guarantee the prompt payment of all pending government bills, which will commence once the ongoing verification process is completed.

He highlighted that the Bottom-Up Economic Transformation Agenda outlines strategic interventions that the government will implement in collaboration with private sector investments in creating an enabling environment across all sectors, particularly for MSMES, to unlock opportunities and achieve inclusive transformation.

Meanwhile, The MSME Accelerator Programme, launched by the banking industry, is designed to provide mentorship and financial literacy training to small businesses. This initiative will help MSMEs scale their operations and achieve long-term success. 

KBA Chairman and NCBA CEO John Gachora reiterated the contribution of MSMEs in the economy and need to support them. 

"As an industry, we acknowledge that MSMEs play a crucial role in our economy, contributing about a third to Kenya’s GDP and providing 8 to 9 of every 10 job opportunities in the country. Supporting their growth, therefore, is vital not only for economic development but also for poverty reduction through innovative business solutions."Gachora said. 

However he urged the Government to revise tax policies in order to protect the sustainability of Bankers. 

"When it comes to taxation in the sector, for every Sh100, Sh57 goes to government in tax, Sh28 goes to employees and Sh18 goes to shareholder. We would like to implore the government to shield the banking sector from more taxation." Gachora said.