75% Of Kenya’s Small, Medium Businesses May Collapse Before By June — Central Bank Of Kenya 

At least 75 per cent of SMEs are facing closure by end of June due to lack of funds, CBK governor Patrick Njoroge has said. During a post-MPC briefing on Thursday, he said there is an urgent need to cushion them as they contribute hugely to the country’s employment and GDP.

Dr. Patrick Njoroge
central bank Governor Patrick Njoroge

“I wanted to underscore the urgency of … putting in place the credit guarantee scheme,” central bank Governor Patrick Njoroge told a virtual news conference. “This is extremely urgent. We cannot do this as business as usual.”

Here Is All You Need To Know

  • On Wednesday, the Monetary Policy Committee retained the base lending rate at seven per cent in its latest review.
  • Njoroge, who heads the committee, said measures adopted in March and April to cushion the economy from the Covid-19 effects were having the intended effect.
  • Growth is expected to worsen in the second quarter of the year (April-June), with the imposition of more stringent travel and transport containment measures, particularly in transport and storage, trade, and accommodation and restaurants.
  • As a result, real GDP growth in 2020 could slow to about 2.3 per cent from 5.4 per cent in 2019, Njoroge said.
  • On Wednesday, the committee backed the Economic Stimulus Programme announced by government to cushion vulnerable citizens and businesses from the adverse effects of the pandemic and enhance economic activities.
  • The measures are expected to be implemented expeditiously in 2020–21 financial year and will focus on key sectors including agriculture and food security, tourism, manufacturing, education , health , ICT and MSMEs.
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“The MPC concluded the current accommodative monetary policy stance remains appropriate and therefore decided to retain the Central Bank Rate at seven per cent,” Njoroge said.

  • He said the committee will continue to closely monitor the impact of the policy measures so far as well as developments in the global and domestic economy and stands ready to take additional measures as necessary.
  • In April, the MPC lowered the CBR from 7.25 per cent in light of the continuing adverse economic outlook.
  • This was after a reduction to 7.25 per cent from 8.25 per cent in March.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
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