The FinAccess MSE Tracker Survey, 2023 revealed a worrying trend among Micro and Small Enterprises (MSEs). In June 2023, a staggering 60.7% of MSEs defaulted on loan repayments, up from 42.8% in October 2022. This is a clear indication of the harsh economic conditions that businesses face, making it difficult to pay their loans on time.
Consequently, their credit scores will be affected, and they may find it challenging to secure credit in the future to run their businesses.
However, the survey also highlights some positive trends. Businesses are embracing alternative financing options such as the hustler fund and digital credit providers. More female-owned businesses are offering consumer credit, indicating a shift towards gender equity in the business sector.
Additionally, businesses with 1-9 employees have shown a decline in loan defaults, indicating that growth and expansion are possible even in challenging economic times. Timely loan repayment is crucial in maintaining a good credit score and enhancing borrowing credibility.
When MSEs repay loans without default, they can apply for more loans to support their businesses and improve their credit score. This will enable them to access more financing options, expand their businesses, and create more job opportunities.
In conclusion, the FinAccess MSE Tracker Survey, 2023 highlights the challenges and opportunities that Micro and Small Enterprises face in Kenya. MSEs can overcome these challenges by embracing alternative financing options, improving their credit scores through timely loan repayments, and taking advantage of growth opportunities. By doing so, we can create a thriving business ecosystem in Kenya that is fair, inclusive, and sustainable.
