The Kenya Private Sector Alliance (KEPSA) and the Mastercard Foundation have launched a fund to provide loans to a maximum of 400 SMEs whose businesses have been affected by the COVID-19 pandemic. The loan facility will be interest free and repayable by up to six months.
The Fund is created through support from the Mastercard Foundation COVID-19 Recovery and Resilience Program and is targeting businesses that find it difficult to access financing from formal lending institutions such as banks and micro-financers. Priority will be given to businesses run by women and young people.
KEPSA will carry out the screening of the Micro, Small, and Medium Enterprises to ensure they meet the criteria for eligibility to access the loans. Loans will range in size with an expected average size of Kshs 1 million.
KEPSA’s CEO, Carole Karuga said: “These are bad times for everybody and a situation like this hits MSMEs the hardest. They already operate in a difficult environment, and research has shown that most MSMEs last two years, and you can see how such a situation would pan out for them.”
She explained the fund and the accompanying program is intended to strengthen the MSMEs’ capacity, and KEPSA would provide technical support, such as helping the businesses adopt digital solutions. In addition to screening the MSMEs, KEPSA will roll out a virtual SME Hub and create a business recovery hub to support the SMEs by offering business development services.
“COVID-19 has affected my business negatively in terms of work consistency and revenue and as a result fewer working hours for my virtual employees. As a business that relies 90 percent on the outsourcing of transcription work, clients are cutting costs and my service offering is at the top of the list to be cut. Through business development services, the solution would be to remodel the business to offer skills that will be in demand now and beyond the pandemic,’’ said Frida Mwangi, the founder of KaziRemote.
KEPSA and the Mastercard Foundation intend for the program to among things: help maintain jobs and livelihoods; identify new business opportunities for women and young people; reduce gender-based violence by enhancing the capacity of women-led and owned businesses to increase revenue and income; prioritize the health and safety of employees, communities, and healthcare workers; and ensure business and supply chain continuity.
Mastercard Foundation Regional Head, Eastern and Southern Africa, Daniel Hailu said: “MSMEs are the backbone of the economy and they need support now more than ever. Through the Mastercard Foundation COVID-19 Recovery and Resilience Program, we are working with our partners to deliver tailored support to MSMEs that will sustain their activities and continue to provide opportunities for dignified work.”
A study that KEPSA conducted in April 2020 revealed that the majority of enterprises across all sectors and company sizes have been affected by COVID-19, with small and mid-sized companies reporting the biggest impact.
The Central Bank of Kenya has also warned that SMEs would be the hardest hit by the slowdown in the economy brought about by the pandemic, with travel and the movement of goods reduced due to the need to maintain social distancing to reduce the spread of the coronavirus.
The pandemic poses a major health risk and far reaching implications to businesses and the economy, particularly the SMEs, which account for about 80 percent of total employment in the country and contribute 28 percent of the GDP.
KEPSA was established to drive economic development through year-on-year improvements in the business environment, by addressing cross cutting business issues, driving investments and addressing socio-economic issues with partners. KEPSA brings together business associations, corporate bodies, Small and Medium Enterprises (SMEs) and start-ups to speak in one voice, working closely with Government and other stakeholders through structured Public Private Dialogue (PPD) platforms and other engagement mechanisms.
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