National Treasury Principal Secretary (PS) Chris Kiptoo on Wednesday, June 19, revealed that the government was in the process of setting up a Kenya Credit Guarantee Company Limited.
PS Kiptoo made the remarks during a meeting with the Credit Guarantee Scheme (CGC) Steering Committee which has been mandated to set up the loan guarantee company.
The Treasury remarked that the company would be critical for sustainability and the long-term impact of credit guarantees to small businesses.
“The Government will be a minority shareholder with other investors being development partners and private sector players,” PS Kiptoo noted.
He added that a policy and legislative framework is currently being processed in readiness for submission to the Cabinet.
According to PS Kiptoo, the establishment of the company is in its final stages following an extensive public participation exercise conducted in the months of April and May.
The National Treasury established CGS in December 2020 in response to the pandemic, which threatened many Micro, Small, and Medium Enterprises (MSMEs) with bankruptcy.
Initially, CGS was launched with a seed capital of Ksh3 billion from the national government, disbursed to 4,006 facilities.
Under the new plan, Kenya Credit Guarantee Company Limited will now be privately controlled, with the national government maintaining a relevant minority share.
“The CGS is currently unable to invest its funds that are not allocated for immediate use, and generally is not aligned to international best practices, including the World Bank Principles for Public Credit Guarantees,” the Treasury had earlier noted why the CGS domiciled in the Treasury should be disbanded.
According to the National Treasury, KCGC will be an independent legal entity as outlined under the Company’s Act 2015.
