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Sunday, July 5, 2020

75 percent of Kenya’s small, medium businesses likely to collapse in June

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Small Businesses Loans in Kenya: The Central Bank of Kenya has raised alarm that the majority of small and medium businesses in Kenya may collapse by the end of June this year.

According to CBK, 75 percent of Kenya’s small and medium-sized businesses will shut down if they are unable to get fresh business funds from banks.

This is the latest indication of how hard things have become for small businesses in Kenya. Although coronavirus has been largely blamed for the turn in fortunes, the downward spiral for small and medium businesses in Kenya has been taking place over the last few years.

Cost of doing business in Kenya has become unbearable

“There was a survey that was done at end of April and that survey indicated that three quarters do not have cash beyond two months. That means by end of June three quarters of the SMEs are already on the ropes and will be gone because they do not have any cash to keep the lights on,” CBK governor Patrick Njoroge said. “I wanted to underscore the urgency of… putting in place the credit guarantee scheme. This is extremely urgent. We cannot do this as business as usual.”

The CBK chief also revealed that the government is planning to provide guarantees for loans given to small and medium businesses.

It however remains to be seen how the cash strapped Jubilee government will accommodate for the bank loans defaulted by struggling small businesses.

President Uhuru Kenyatta has already hinted that he may open up the economy on June 6 when measures that have been put in place to contain the spread of the coronavirus are reviewed.

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