in ,

75% Of Small, Medium Businesses At Risk Of Collapsing By End Of June , CBK Boss Njoroge Warns

Central Bank of Kenya (CBK) Governor Patrick Njoroge during a virtual briefing on Thursday, May 28 [Photo/Courtesy]

Three-quarter (75%) of micro, small and medium-sized enterprises would be in a critical state by the end of June due to the effects of the novel Coronavirus on the economy, Central Bank of Kenya (CBK) Governor Patrick Njoroge said on Thursday.

This, Njoroge said, is according to a survey which was conducted at the end of April.

Speaking during a virtual press conference, Njoroge said there is need to come up with ways to cushion the businesses as they contribute greatly to the country’s employment and GDP.

The businesses, the CBK boss said, risk shutting down their operations due to limited funds to even pay suppliers.

“Whatever policy action put in place to help MSMEs needs to go beyond finance, into ‘finance plus’, including linkages to other markets, ” said Njoroge.

As part of the measures to support businesses, Njoroge said, Kenyans should be ready to explain challenges they are experiencing with their banks for those still servicing loans.

During the briefing, Njoroge revealed that diaspora remittances are expected to drop 12 per cent this year on coronavirus effects.

Remittances are the leading foreign exchange earner for Kenya.

Read: CBK Nods To Acquisition of Ksh3.2 Billion Imperial Bank Assets By KCB

Njoroge was speaking a day after the Monetary Policy Committee Meeting that saw the base lending rate retained at 7 per cent.

“The MPC concluded that the current accommodative monetary policy stance remains appropriate and therefore decided to retain the Central Bank rate at 7:00 per cent,” the committee said in a statement on Wednesday.

Njoroge, who chairs the committee, noted that recent monetary policy measures amid the Covid19 pandemic have had the desired effect in the economy.

“The Committee noted that the policy measures adopted in March and April were having the intended effect in the economy and are still being transmitted. The MPC concluded the current accommodative monetary policy stance, therefore, remains appropriate,” he said.

Read Also: Mobile Lending Apps Silently Halt Operations As CBK Directive on CRBs Takes Effect

“…In line with the additional emergency measures announced by CBK on March 18 to provide relief to borrowers, the repayment period of personal/household loans amounting to KES 102.5 billion, or 13.1 per cent of the banking sector personal/household gross loans, had been extended, by the end of April.

“For other sectors, a total of KES 170.6 billion had been restructured mainly to Trade (43.5 per cent), Manufacturing (13.6 per cent), Tourism (9.0 per cent) and Real Estate (9.8 per cent). Total loans restructured worth KES 273.1 billion accounted for 9.5 per cent of the total banking sector loan book of KES 2.8 trillion. These measures have begun to provide the intended relief to borrowers.”

Read Also: Kenyans Who Have Defaulted Loans Less Than Sh1,000 To Be Delisted From CRBs – CBK

Headline inflation, Njoroge said, remains well accommodated within the target range of 2.5 to 7.5 per cent having come in at 5.62 per cent in April.

CBK further retained its 2020 economic outlook at a 2.3 per cent growth rate having lowered it from 3.4 per cent in March.

“Nevertheless, growth is expected to weaken in the second quarter, due to the adverse impact of the containment measures, particularly in transport and storage, trade and accommodation and restaurants. As a result, real GDP growth in 2020 could slow to about 2.3 per cent from 5.4 per cent in 2019,” said Njoroge.

Email your news TIPS to news@kahawatungu.com or WhatsApp +254708677607. You can also find us on Telegram through www.t.me/kahawatungu

Written by Wycliffe

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Loading…

0

Comments

0 comments

Facebook Launches TikTok Inspired Music-making Product Called Collab

Kibra Accounts For 35 Of 147 New Covid-19 Cases Confirmed In The Last 24 Hours