Sh1.6 billion Mastercard foundation emergency loans to save small businesses

A 24-year old business owner, wife and mother of twins, Elizabeth Jeremiah who operates Network Shop in Kiganjo Thika on the outskirts of Nairobi is contending with the aftershocks of Coronavirus.

The pandemic has seen her customers thin out or rely on credit even as she struggles to meet loan payments and stock up.

“I was struggling to keep my business running and I almost closed down due to the financial hardships,” she says.

She hopes to benefit from Mastercard Foundation’s Sh1.6 billion ($15 million) COVID-19 Recovery and Resilience Program, in partnership with Kenya Private Sector Alliance (KEPSA), WomenWork Network, Kenya National Chamber of Commerce & Industry (KNCCI), and TechnoServe with technical support from the Grassroots Business Fund and 4G Capital.

“A repayable grant will be a lifesaving opportunity as I will have the funds to stay afloat and not have to close down my shop. Being trained on how to navigate through such a crisis will allow me get out of the crisis better and stronger,” Elizabeth said.

European countries like Spain, Italy, France and the United Kingdom have given loans, tax relief and cash grants.

In the UK, for example, employers can apply for staff to get 80 per cent pay if they cant work and self-employed people can receive up to Sh328,000 per month in grants for at least 3 months.

Germany paid out more than Sh140 billion to more than 150,000 self-employed individuals or businesses with fewer than five employees directly to their account.

In Kenya, private sector and government support initially focused on ensuring small businesses do not run out of money as banks offered a 12-month loan repayment holiday while government lowered income tax levied on profits to 25 per cent from 30 per cent and reduced turnover tax to 1 per cent from 3 per cent for small and mid-sized businesses with annual revenues of Sh50 million and below.

The National Treasury has also drafted and submitted to parliament; legal changes to roll out a viable guarantee scheme that will see Government underwrite loans banks extend to riskier SMEs.

As the effects of the COVID-19 global pandemic ripple through economies, women and young people are expected to bear the greatest burden as a result of reduced employment opportunities, layoffs and poorly performing MSMEs, most of which are led and owned by women and young people.

“MSME’s are the backbone of the economy and they need support more than ever.  The Mastercard Foundation is proud to work with these partners to deliver tailored support to tens of thousands of MSMEs with the aim of helping them sustain their activities and continue to provide opportunities for dignified work,” said Daniel Hailu, Regional Head Eastern and Southern Africa at the Mastercard Foundation.

KEPSA, in close collaboration with the Government of Kenya, will target 400 MSMEs to access an emergency finance facility that will be managed by Grassroots Business Fund as the independent Fund Manager.

The partnership will include the rollout of a virtual MSMEs business recovery hub to provide business development service as well as increasing KEPSAs ability to support women businesses.

The partnership with WomenWork Network through their Rebuild Program will focus on low-cost loans to women-led MSMEs to enable the businesses to withstand the significant revenue drops they are currently experiencing.

The low cost emergency loans will enable them to sustain jobs that may otherwise have been lost and access tailored online business training. The Rebuild program will be available to the over 4,000 women who are members of the  #Womenworkke Facebook group.

The Kenya National Chamber of Commerce and Industry (KNCCI) will run interventions that include low cost businesses loans to deserving MSMEs and a trade digital platform to support an e-commerce ecosystem to make the enterprises more agile and resilient.

The intervention will target 15,000 direct members of KNCCI, supplemented by 85,000 KNCCI association members, especially focusing on the hawkers, the fashion industry, Jua Kali, retailers, and restaurants.

TechnoServe will work with 28,000 microretailers, primarily women and young people, through the Micro-enterprises Strengthened for Pandemic Adaptation and Resilience in Kenya (mSPARK) program, providing targeted digital technical assistance and facilitating financial support through financial-technology credit provider 4G Capital.

The emergency repayable business grants will support overhead expenses such as salaries, rent, and utilities, and, in conjunction with the technical assistance provided through the program, will enable microretailers to source vital products and digitize their operations.

This program, which is being rolled out in Nairobi and surrounding metropolitan counties as well as Mombasa and Kilifi counties, will help to stabilize and strengthen the resilience of microretailers who own general shops, salons, restaurants and eateries that are essential to the economies and food security of

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