NAIROBI, Oct. 16 (Xinhua) -- The Kenyan banking sector, under the umbrella of the Kenya Bankers Association (KBA), on Wednesday pledged 450 billion Kenyan shillings (about 3.48 billion U.S. dollars) to support micro-, small-, and medium-sized enterprises (MSMEs) over the next three years, starting in 2025.
This initiative is part of the banking sector's commitment to support MSMEs in accessing more affordable credit to boost their growth and development while addressing one of the major challenges they face.
The KBA made the announcement during the launch of the banking sector's MSME Accelerator Program and the release of the banking industry report 2023 in Nairobi, the capital of Kenya.
Speaking at the event, Kenyan President William Ruto affirmed the government's commitment to supporting MSMEs through policy measures and institutional backing.
Ruto said that contracts worth 38.7 million dollars have been set aside for MSME traders to provide products, such as doors and windows, for the houses being built under the Affordable Housing Program.
He also urged local banks to provide affordable loans to these traders. "I commend the banking sector for this bold initiative, which will undoubtedly unlock the potential of our MSMEs and propel them to greater heights," he said.
Ruto said that his government is constructing 400 new fresh produce markets across the country to improve the business environment for MSMEs.
He called on local banks to lower their interest rates in line with the Central Bank of Kenya's recent cut of the central bank rate to 12 percent from 12.75 percent in August. Currently, commercial rates remain as high as 20 percent.
"Lending to the manufacturing sector is not doing well and is weighing down our economy," he said, calling on the banking sector to extend credit facilities to manufacturers, as Kenya continues to import goods that could be produced locally, limiting job creation and depleting foreign exchange reserves.
Ruto stressed the importance of supporting Kenya's MSME sector, which employs between 80 percent and 90 percent of the country's workforce and contributes one-third of the nation's gross domestic product.
Meanwhile, the president expressed optimism about Kenya's economic outlook, pointing to the rising number of foreign investors drawn to the country. He credited this to improved economic fundamentals, with inflation dropping to 3.6 percent from a high of 9.5 percent in 2022 and the shilling stabilizing at around 129 to the dollar, down from 165 shillings during the same period. ■
