State set to unveil kitty for small businesses

Ministry of Industrialisation and Enterprise Development Cabinet Secretary Adan Mohamed PHOTO: STANDARD

By NICHOLAS WAITATHU AND LILIAN KIARIE

Small traders will be before the end of the current financial year start borrowing loans at low interest rates compared to the current market rates.  This follows an announcement by government on Thursday of plans to establish a new fund specifically for the micro and small enterprises in the next 12-months.

 The new fund is expected to boost the Sh4.8 billion revolving fund initiated a few years ago and currently being administered by various commercial banks.

Ministry of Industrialisation and Enterprise Development Cabinet Secretary Adan Mohamed disclosed that plans are being fast-tracked to ensure a fund accessible to the small traders is established before June next year.  

He explained that the intention  to establish the new kitty is informed by the challenges small traders are facing today and thus not able to contribute fully to the growth of the national economy.

“For long small entrepreneurs in the country have been facing a financial challenge owing to lack of basic credit security requirements demanded by local financial institutions,” he stated.

 Mohamed stated that the Micro and Small Enterprises (MSE) fund would be mobilised from government sources, development partners and also private sector financial players.

He made the remarks when he officially launched the Micro and Small Enterprises (MSE) Act 2012 in Nairobi. Former Labour Minister John Munyes had appointed directors for the Micro and Small Enterprise Authority (MSEA).   “We have not decided on the size of the fund yet but government will commit some money. We shall also be speaking to our development partners and also commercial banks to find out what role they can play in all this,” said Mohamed.

In the 2010/2011 and 2011/2012 financial years, the Minister for Finance allocated Sh3.8 billion and Sh1 billion respectively to local commercial banks. Some of the banks include Equity Bank, Cooperative Bank of Kenya and K-Rep Bank. 

Early this year, the authority directors had initiated the process of recalling the Sh4.8 billion from the commercial banks claiming the latter have been advancing the funds at current market rates, thus making it difficult for the majority of small traders to borrow. 

However, the Chairman of the new authority, Billy Muhia Ngugi, said the move is yet to materialise, as management structures are yet to be operationalised in the institution.

“We hope in the next few months we will be able to put in place all the structures of management required and thus be able to be engage Treasury over the issue,” he said.

Mohamed observed that the new MSE Act 2012 that seeks to formalise micro and small enterprises and provide them with subsidised loans and better permanent working spaces must be part and parcel of Vision 2030. 

“If the Act is fully implemented, it presents an excellent opportunity to propel the Kenyan economy to a 10 per cent per annum growth level,” said Mohammed.

Kenya Private Sector Alliance (KEPSA) Chief Executive Officer, Carole Kariuki said that operationalisation of the authority would end the running battles between small businesses especially street vendors and county government enforcement officers that have been witnessed in major town centres.