Why credit guarantee schemes offer hope to Kenya’s small firms

To maximise the impact of credit guarantee schemes, banks should focus on developing products that align with the needs of SMEs.

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The micro, small, and medium enterprises ecosystem plays a critical role in driving economic growth in many countries worldwide. While there is adequate evidence of the potential of SMEs, most of them struggle to finance their expansion due to factors such as asymmetry of information and credit rationing, in both emerging and developed economies.

Limited finance to SMEs has been identified as the most severe obstacle impeding their growth. As a result, many do not live past their third anniversary.

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Note: The results are not exact but very close to the actual.