Small businesses faced tough economic times last year

Small Business in Kenya [Photo: KNA]

The Central Bank of Kenya’s 2022 Banking Sector Annual Report reveals that small businesses faced tough economic times in 2022.

At least 241,000 small businesses either defaulted on, or had to have loans valued at Sh222.5 billion restructured.

At least 216,000 loan accounts belonging to Micro, Small and Medium-sized Enterprises, valued at Sh90.4 billion were classified as non-performing, 18,000 loan accounts valued at Sh9.6 billion were written off, and 6,000 loan accounts valued at Sh122.5 billion were restructured.

“Of the 1.18 million MSMEs loan accounts in the banking industry as of December 2022, 216,951 accounts valued at Sh90.4 billion were classified as non-performing. This amounted to 18.3 per cent of total MSME loan accounts and 11.5 per cent of the total value of outstanding MSME loans,” this is according to the CBK report on MSME Finaccess Business Survey.

The report further reveals that non-performing loans (NPLs) in MSMEs made-up 17.5 percent of Sh515.7 billion total banking industry NPLs in 2022. 

The MSMEs’ NPLs in 2022 are a slight fall from the situation in 2020, when Covid-19 brought the economy to a standstill when they were Sh98.7 billion.

The report shows that commercial banks last year had to forego at least Sh9.1 billion lent out to MSMEs but they defaulted on repayment, while microfinance banks (MFBs) wrote off Sh510 million.

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