KENYA – The Supporting Access to Finance and Enterprise Recovery (SAFER) project, financed by the International Development Association (IDA) is set to improve access to finance to MSMEs after being severely impacted by the COVID-19 crisis.
More than 250,000 micro, small, and medium enterprises (MSMEs) in Kenya will benefit from the program that will address market failures in access to finance by MSMEs (including youth and women-owned enterprises) that have been negatively impacted by the COVID-19 pandemic.
“Kenya’s 7.4 million MSMEs hold the key to job creation and greater productivity, however they urgently need greater access to credit to scale operations, raise their productivity and deliver shared prosperity for Kenyans,” said Keith Hansen, World Bank Country Director for Kenya.
“We are working with the Government of Kenya, the private sector and other development partners to address the unmet need for financing within the MSME space.”
Project support for MSME’s include fostering innovation, providing liquidity through microfinance banks (MFBs), savings and credit cooperative organizations (SACCOs), and digital channels (including instruments that can leverage greater private capital), and de-risking lending.
It will also provide technical assistance and support for project management. By attracting parallel financing from other development partners, the project aims to leverage implementation arrangements to mobilize additional private sector financing.
While the project responds to the impacts of the pandemic in the short term, it also seeks to address structural challenges affecting MSME financing in the medium to long term.
“MSMEs are the engine of growth in Kenya, yet they face the most difficulty in accessing financial services,” said Neema Mwingu, World Bank Senior Financial Sector Specialist.
The project will be managed by the National Treasury in collaboration with other institutions, including the Central Bank of Kenya, the SACCO Societies Regulatory Authority, other government ministries and departments, and the private sector.
SAFER will complement other world Bank-financed initiatives by the Government of Kenya, such as the Kenya Industry and Entrepreneurship Project, that have paved the way by helping to strengthen the legal, regulatory, and institutional environment needed to achieve efficient financial intermediation for MSMEs.
SAFER also aims to increase government support for access to finance for women-owned businesses, including the Women Enterprise Fund, the Uwezo Fund, and the National Government Affirmative Action Fund.