Kenya's Treasury plans an eightfold expansion of a government-backed loan program. The Credit Guarantee Scheme will grow from three billion to over twenty-five billion shillings. This aims to unlock fifty billion shillings in bank loans for small businesses typically denied credit.
The draft budget statement says the program will facilitate lending for more than two hundred thousand enterprises. It works by having the state absorb part of the default risk, encouraging banks to offer loans to businesses without traditional collateral. This initiative will run alongside a separate private sector guarantee scheme still in development.
Since its 2020 launch, the existing scheme has seen slow use, with total disbursements around six point two billion shillings. The expansion aligns with the administration's broader push on affordable credit, including the larger Hustler Fund digital lending platform. The Central Bank has also drafted rules to allow private credit guarantee companies, requiring them to hold significant capital reserves matching those of commercial banks.
The draft budget statement says the program will facilitate lending for more than two hundred thousand enterprises. It works by having the state absorb part of the default risk, encouraging banks to offer loans to businesses without traditional collateral. This initiative will run alongside a separate private sector guarantee scheme still in development.
Since its 2020 launch, the existing scheme has seen slow use, with total disbursements around six point two billion shillings. The expansion aligns with the administration's broader push on affordable credit, including the larger Hustler Fund digital lending platform. The Central Bank has also drafted rules to allow private credit guarantee companies, requiring them to hold significant capital reserves matching those of commercial banks.
