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{
    "id": 1026619,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1026619/?format=api",
    "text_counter": 335,
    "type": "speech",
    "speaker_name": "Kipipiri, JP",
    "speaker_title": "Hon. Amos Kimunya",
    "speaker": {
        "id": 174,
        "legal_name": "Amos Muhinga Kimunya",
        "slug": "amos-kimunya"
    },
    "content": " Hon. Speaker, I beg to move that the Public Finance Management (Amendment) Bill be now read a Second Time. The objective of this Bill is basically to amend the Public Finance Management Act, 2012 by introducing a major amendment which seeks to create a framework that will facilitate the establishment and operationalisation of a Credit Guarantee Scheme to support Micro, Small and Medium Enterprises (MSMEs). Once established, the scheme aims to provide credit guarantees for the loans that will be issued to these institutions by commercial banks and other lenders. This will end up reducing the default risk as viewed from the lending institutions end. The result is that lenders, credit being guaranteed, will be able to lend more and at lower rates. With the risk reduced, the cost of lending should come down. Hon. Speaker, allow me to give a brief background. You may recall that in recognition of the importance of MSMEs and the negative impact that COVID-19 has had on them, His Excellency the President, as part of his measures to address some of the negative impacts on business, on 28th May 2020, unveiled an 8-Point Economic Stimulus Programme. Within this programme, he included the provision for the National Treasury to allocate a seed capital of Ksh3 billion which is ritualised as we go on to purely start the Credit Guarantee Scheme for the MSMEs. Members will recall that this has been factored in the 2020/2021 Financial Year. MSMEs have been identified as pivotal in accelerating the economic growth of this country. The jua kali industry and small traders fall within the wider bracket of the MSMEs. There are different definitions and all those have been captured in the Bill. Hon. Speaker, we know that by virtue of their small sizes, these businesses are vulnerable. First, they do not have access to credit. Nobody trusts them. They do not have a history to take to the bank to support their future cash flows and have no money to invest in technologies for innovation. They also do not have access to the wider markets like their competitors in the larger markets have. Generally, the World Bank and the Central Bank have come up with several factors that are impeding the growth of this sector. The most important has been that... They may be innovative, have good ideas, have a market and even orders from the county and national Government but they do not have finances. The tender finance they were getting was very expensive. His Excellency the President looked at that issue and after holding discussions with them, concluded that if they could access credit from the formal banking systems, then they would be able to trade at par with everyone else at reduced costs. As opposed to what the United States of America is doing in terms of issuing direct cheques to businesses under the protection plans and what other countries are doing in terms of giving money directly to organizations, Credit Guarantee Schemes do not distort the market. This is because you are accessing money from the same commercial banks except that the money is guaranteed for the small people by the Government while for the bigger guys, it is guaranteed by their history and reputation. This will mean that a small brewer in a rural setting whose turnover"
}