Kenya’s small and medium businesses need urgent help to survive the economic slowdown caused by the novel coronavirus, and many are at risk of shutting down by the end of June, the head of the central bank said on Thursday.
On Wednesday, the bank said business were expected to take advantage of credit available to them once a planned credit-guarantee scheme was in place.
“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.”
At its March meeting, the central bank’s monetary policy committee reduced the amount of cash banks are required to set aside, releasing 35.2 billion shillings for lending. Bank loans worth 273 billion shillings have also been restructured due to coronavirus-related hardships.
The monetary policy committee has also cut its main interest rate by a total of 125 basis points over two meetings to support the economy. On Wednesday, it left its benchmark rate at 7.0%, saying that its accommodative stance remained appropriate.
In early May, the International Monetary Fund’s executive board approved $739 million in emergency financing to help Kenya respond to the pandemic.
Citing a study in April, Njoroge said 75% of businesses surveyed had said without help they would close by the end of June because they lacked credit buffers and other resources to survive the slowdown.
Njoroge said details of the credit guarantee scheme were still being worked on. Last month, he said it could be around 100 billion shillings ($935.89 million).
Kenya has 1,618 confirmed coronavirus cases and 58 deaths. To limit its spread, Kenya has suspended commercial flights in and out of the country, imposed a dusk-to-dawn curfew and banned public gatherings. It has also halted movement in and out of five regions, including Nairobi, the capital.