SMEs competitiveness survey by the International Trade Centre, Ministry of Trade, and Kenya National Chamber of Commerce and Industry released in September last year shows that 33 per cent small traders avoid commercial bank loans despite their need for credit. SMEs represented the high growth in employment creation, having scooped 83.6 per cent of the 846,000 jobs created across 2018 as per provisional data from the Kenya National Bureau of Statistics. Year after year, mobile money deployment has grown faster than any other channel to mirror the increased role of the digitisation of financial services. Digital lenders have bridged a gap in offering much-needed credit to small business owners who could not access credit because they lacked a credit score or banking history.
- READ MORE
- McDonald's discriminates against Black franchisees, lawsuit claims
- Restructuring at Portland Cement enters final stage
- South African state firms seeking billions in bailouts, government says
- KenGen Board renews CEO contract
“Improved credit rating supported by the CIS system has over the last couple of years allowed digital lenders like M-Shwari, Tala or Zenka to provide the necessary funding to small businesses requiring quick short-term loans to thrive,” says Duncan Motanya, the CEO, Zenka Finance. “It is now taking Kenyans a few minutes to access credit at their comfort; many people no longer need to travel or physically present paperwork. With just a tap on your smartphone, you can key in crucial data points that allow lenders to rate your creditworthiness.”
The Viffa SME access to Finance 2020 study points out that financing from family and friends, owner funds also remain the main source of capital for SMEs. Kenya SMEs continue to struggle with accessing business finance. In the last four years, this was more pronounced due to external factors such as heavy domestic government borrowing, delayed payment by county and national governments, and interest rate cap among others.
The year 2020 was projected to be turnkey on the back of several initiatives that were espoused to change the SME access to finance tide including; repeal of the interest rate cap, establishment of a credit guarantee scheme, payment of pending bills owed to SMEs, set up of SME fund together with supporting policy and Biashara centers, SME loaning through STAWI, financing opportunities through African Development Bank among others. Unfortunately, the COVID 19 pandemic has caused unprecedented havoc to the Kenyan economy with SME bearing the full brunt.
The government has put in measures to backstop SMEs by providing liquidity relief through various tax and non-tax interventions such as the reduced turnover tax from three to one per cent, reduced corporate tax from 30-25 per cent, reduced VAT from 16-14 per cent among others. “Marketing remains top priority as a measure to recover from COVID 19 with SMEs projecting to adapt to a new normal driven by changing consumer trends hence the emerging need to invest in; changing business model, capacity building of employees and modern equipment."
No comments :
Post a Comment