Commercial banks have committed Kshs 450 billion financial support towards Micro, Small, and Medium-sized enterprises (MSMEs) over the next three years to enhance access to more affordable credit to boost their growth and development, whilst addressing access to finance as one of the major challenges facing them.
This was announced during the launch the banking sector’s MSME Accelerator Program and the release of the Banking Industry Total Tax Contribution Report 2023 in Nairobi.
President William Ruto lauded the banking sector for committing to double its financial commitment to MSMEs, adding that the Government would lend its support to the sector through policy and institutional backing.
“I commend the banking industry’s pledge to double lending to MSMEs by providing KSh150 billion in new loans annually, beginning 2025. Accordingly, the government will support this bold and innovative move through policy and institutional support, including measures to guarantee the prompt payment of all pending government bills, which will commence once the ongoing verification process is completed,” said President Ruto.
The banking industry has had a collective tax contribution of Kshs 825 billion to the economy over the last five years.
“The banking industry’s tax contribution in the 2023 financial year alone stood at a record Ksh 190.26 billion, a clear demonstration of the sector’s commitment to supporting our national development goals,” President Ruto said.
He called for collaborative efforts between banks and the public sector to enhance financing to the manufacturing sector to spur investments and growth.
“I commend the banking sector for this bold initiative, which will undoubtedly unlock the potential of our MSMEs and propel them to greater heights. By formalizing their operations and accessing credit, these enterprises will not only contribute to economic growth but also create much-needed employment opportunities for our youth,” he said.
National Treasury, Cabinet Secretary, John Mbadi, underscored the importance of a predictable tax environment to foster continued growth and investment in the banking sector.
“The implementation of a national tax policy and clear tax laws will reduce litigation between taxpayers and revenue authorities, creating a more conducive environment for businesses to thrive,” Mbadi said.
He commended the banking industry’s efforts in supporting MSMEs through initiatives such as KBA’s Inuka Enterprise Programme, which has trained businesses across the country, increasing their creditworthiness, operational efficiency, and resilience.
Kenya Bankers Association (KBA) Chairman, John Gachora, reiterated the industry’s commitment to enabling MSMEs to formalize, access credit, and contribute to economic growth and job creation.
“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.
Gachora also highlighted the challenges faced by MSMEs, including pending bills estimated at Kshs 70 billion, which negatively impact supply chains, business viability, and bank lending. He called on the government to address this issue to ensure a healthier business environment for MSMEs to flourish.