UK launches Sh672 million support fund for Kenyan SMEs

British High Commissioner to Kenya Neil Wigan. (Handout)

By Alfred Onyango
Tuesday, November 5, 2024

Of this amount, the fund targets to raise $240 million (Sh31 billion) from domestic institutional investors and the rest from foreign investors.

The UK government has launched a $5.2 million (Sh671.8 million) funding initiative to support Micro, Small and Medium-sized Enterprises (MSMEs) in the country.

This is through the financial vehicle 'Listed SME Debt Fund', sponsored by FSD Africa, a specialist agency making finance work for Africa's future goals.

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Speaking on Tuesday in Nairobi, Neil Wigan, the British High Commissioner to Kenya, said the kitty aims to mobilise up to $300 million (Sh38.8 billion) of sustainable finance to provide affordable credit to Kenyan SMEs.

Of this amount, the fund targets to raise $240 million (Sh31 billion) from domestic institutional investors and the rest from foreign investors.

"We must lower the cost of borrowing for Kenyans. This fund bolsters the UK's financial toolkit in Kenya which has supported long-term job creation and economic growth over many years, and it will deliver for all the hardworking hustlers of this country, especially women, young people and persons with disabilities who are often pushed right to the margins of the Kenyan economy," Wigan said.

"The UK's economic relationship with Kenya is the cornerstone of the UK-Kenya strategic partnership, and we look forward to delivering this together to support SMEs to deliver jobs and growth."

Notably, the high commissioner says the funds are not specific to a sector, as it will meet the needs of Kenyan business owners ranging from 'fundis' to financers to farmers, by lowering the cost of borrowing money.

"The fund targets to support at least 10,000 MSMEs; 50,000 households; create, protect and support over 89,000 jobs; and improve access to basic services for over 200,000 people," he said.

He added that the fund will be listed and managed in Kenya, providing an attractive investment opportunity for Kenyan investors, by de-risking investments in MSMEs, whilst still offering attractive returns.

"It will also encourage pension funds to invest in sectors that support the flow of goods, services and labour in Kenya."

SMEs are crucial to Kenya's economic growth, reportedly accounting for 98 per cent of businesses and about 24 per cent of Kenya's gross domestic product.

Beyond their economic impact, SMEs have also been reported to serve as vital engines of employment generation, particularly for marginalised groups such as youth, women and persons with disabilities, accounting for 14 million (30%) of jobs.