Kenyan small businesses (SMEs) get Sh15bn World Bank recovery cash according to revelation by National Treasury document.
According to a National Treasury document, the World Bank will provide Sh14.47 billion ($100 million) in finance to Kenyan small companies that were ravaged by the Covid-19 outbreak.
The Supporting Access to Finance and Enterprise Recovery (SAFER) project’s goals, according to the Treasury, are to improve capabilities, expand access to financial services, and aid MSMEs in their post-Covid-19 recovery.
“The project seeks to address market failures in the provision of finance to MSMEs, which have been exacerbated by the negative impact of Covid-19,” said the Treasury in a report that was published in March this year.
The World Bank funding will augment the Financial Inclusion Fund, the Hustler Fund, which President William Ruto established as part of his bottom-up program shortly after taking office.
The size of loans to individual microenterprises will range between Sh7,000 and Sh150,000 while small enterprises will get between Sh150,001 and Sh250,000.
The repayment is expected to go between 18 months and three years for the micro-enterprises and small ones in that order.
A grace period of six months may be applicable for both loans, according to the Treasury.
A total of Sh8 billion will be used to boost liquidity, particularly for women-led, unregistered businesses, in order to counteract the pandemic’s negative consequences.
The National Treasury will establish a Credit Guarantee Scheme to facilitate the issue of partial credit guarantees to financial institutions that on-lend MSMEs, spending an additional $30 million (Sh4.42 billion) on de-risking.
The remaining $15 million (Sh2.2 billion) will go to technical assistance to build the resilience capacity of the MSME finance ecosystem beyond the five-year project.
At the height of the COVID-19 pandemic, a lot of MSMEs closed shop due to the stringent safety and health measures that the government implemented to curb the spread of the viral disease.
As a result, close to 1.8 million jobs were lost in an economic crisis that paralyzed the hospitality, transport, education, and entertainment sectors, official data shows.