Kenya: CBK reveals 75 percent of small and medium-sized businesses risk collapse
.Trim()Devdiscourse News Desk | Nairobi | Updated: 29-05-2020 16:49 IST | Created: 29-05-2020 16:49 IST
A survey was done by the Central Bank of Kenya (CBK) which reveals about 75 percent of Kenya's small and medium-sized businesses face collapse if they fail to get fresh funds from banks or equity partners by end of next month, according to a news report by The East African.
CBK Governor, Patrick Njoroge on Thursday has said that the small businesses surveyed had said that without the help they would close by the end of June because they lacked credit buffers and other resources to survive the slowdown caused by the coronavirus.
The impact of social distancing, dusk-to-dawn curfew and closure of businesses like bars and restaurants has impacted on consumer spending, leading to job cuts and unpaid leave for workers as firms race to cut costs.
"There was a survey that was done at the end of April and that survey indicated that three quarters do not have cash beyond two months. That means by end of June three-quarters of the SMEs are already on the ropes and will be gone because they do not have any cash to keep the lights on," Dr. Njoroge said at a virtual news conference.
"I wanted to underscore the urgency of... putting in place the credit guarantee scheme. This is extremely urgent. We cannot do this as business as usual."
The government will provide guarantees for loans given to Kenya-based small and medium-sized businesses, meaning the government commits to repaying banks a share of the loans should the small traders' default.