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Workers in the United Aryan textile factory at the Export Processing Zone in Nairobi on February 4, 2025. [File, Standard]
Kenya’s Micro, Small and Medium Enterprises (MSMEs) are indisputably the engine of the national economy, sustaining families, creating employment and anchoring local communities.
However, a persistent structural hurdle threatens their survival: Data from the revised MSME policy review process shows small businesses require Sh4 trillion in market loans to sustain and expand operations.
However, commercial banks currently supply only Sh700 billion. This leaves a massive Sh3.3 trillion financing shortfall. While it is easy to point fingers at financial institutions for failing to support the entrepreneurial sector, an objective look at Kenya’s financial landscape reveals a more complex reality. Bridging the funding gap requires mutual adjustment, balancing the genuine cash flow needs of small businesses with the risk management realities that banks must navigate.
