Ruto urges banks to increase lending to MSMEs as gov't unveils revised policy

President William Ruto has challenged commercial banks to increase lending to micro, small and medium enterprises (MSMEs), saying inadequate access to affordable credit continues to hinder the growth of one of Kenya's most important economic sectors.

Speaking during this year's World MSME Day celebrations at the Kenyatta International Convention Centre (KICC) in Nairobi on Saturday, the President said that although MSMEs contribute about 40 per cent of the country's economy, most remain excluded from formal financial services.

"Despite commercial banks lending about Ksh.1 trillion to the sector over the past three years, this remains woefully low compared to what is needed for small businesses to flourish," he said.

"The uncomfortable truth remains: The vast majority of micro and small enterprises, the very backbone of our economy, have remained outside that flow of capital."

President Ruto said the sector faces an estimated financing gap of Ksh.3 trillion and urged financial institutions to develop innovative lending models that support entrepreneurs.

"I put it to my friends in finance plainly - how can we possibly grow our economy while locking most of our people off the balance sheet? How do we create jobs for our youth while refusing to bank them?" he posed.

The president said the government has implemented several reforms aimed at strengthening the MSME sector, including establishing a dedicated State Department to oversee its development.

On access to finance, Ruto said Ksh.90 billion has so far been disbursed through the Hustler Fund to more than 27 million Kenyans over the last three years.

Ruto further noted that more than eight million Kenyans had been removed from the Credit Reference Bureau (CRB) blacklist, with two million already rebuilding their credit profiles and rejoining the formal financial system.

"We are now turning that credit history into a National Credit Score so that character and behaviour, not just a title deed or a logbook, can unlock financing," he stated.

The President also encouraged local banks to emulate Bangladesh's Grameen Bank, founded by Nobel Peace Prize laureate Muhammad Yunus, which has provided billions of dollars in unsecured loans to low-income borrowers.

"The unbanked are not a risk to be kept at arm's length. They are a market waiting to be served," he said.

United Nations Resident Coordinator Garry Conille commended Kenya's efforts to empower small businesses, saying expanding financial inclusion was key to economic transformation.

"This is not charity. This is a nation deciding that no Kenyan with ambition should be invisible to the economy," he said.

Co-operatives and MSMEs Development Cabinet Secretary Wycliffe Oparanya said the Revised MSMEs Policy 2026, launched by President Ruto during the event, would help eliminate barriers that have long constrained business growth.

Nairobi Governor Johnson Sakaja said the county government's Unified Business Permit had streamlined the licensing process, reducing bureaucracy and improving the ease of doing business in the capital.

The event brought together senior government officials, development partners, Members of Parliament and entrepreneurs from across the country, including beneficiaries of government programmes such as the National Youth Opportunities Towards Advancement (NYOTA), the Youth Enterprise Fund and the Women Enterprise Fund.