Credit Guarantee Scheme



Establishment of the Credit Guarantee Scheme (CGS) to enhance access to credit by Micro, Small and Medium Enterprises (MSMEs) is a longstanding policy objective of the Government. Kenya Vision 2030, in the Third Medium Term (2018-2022) Plan for the Financial Services Sector, identified credit guarantee as a key programme to enhance performance of MSMEs in the country.

The focus on MSMEs is informed by the critical role the enterprises play in Kenya’s economy through creation of employment opportunities and wealth for a large number of people. The MSME sector employs approximately 15 million people directly and contributes about 34% to the country’s Gross Domestic Product (GDP). The sector also contributes about 91% of the total new jobs generated annually.

MSMEs face a number of challenges despite the significant role they play in the economy. Most of the start-up enterprises do not survive their 4th birthday due to limited access to credit for capital and operational needs, market challenges, and poor business models. Further, MSMEs which access credit are compounded by unfavourable terms of credit due to lack of sufficient collateral, high collateralization requirements, short repayment periods and high interest rates as they are perceived risky by financial institutions.

On 8th December 2020, the Government of Kenya (GoK), through the National Treasury, rolled out the CGS to respond to the identified challenges, in order to enhance access by MSMEs to quality and affordable credit. The CGS is anchored in the Public Finance Management (Amendment) (No.2) Act, 2020, and the Public Finance Management (Credit Guarantee Scheme) Regulations, 2020.

The implementation of the CGS is through a Credit Guarantee Agreement executed jointly with Participating Financial Intermediaries (PFIs). Through the CGS, the Government commits to pay PFIs a portion of the outstanding principal amount in the event of default on qualifying credit facilities advanced to MSMEs.

The CGS organizational structure comprises the Steering Committee which oversees the administration of the CGS, the Administrator who supervises and controls the administration of the CGS and the Scheme Manager and staff to run the day to day operations of the CGS. The Cabinet Secretary appointed a secretariat on 9th December 2020, to among other things, monitor, evaluate and report the performance of the CGS. For successful implementation of the secretariat’s functions, development of a monitoring and evaluation manual was deemed necessary. This manual will provide for the monitoring, reporting and evaluation of the activities of the Scheme.

Vision, Mission and Core Values

Vision: to be a world class credit guarantor for the growth of MSMEs

Mission: To enhance MSMEs access to finance through innovations and partnerships in provision of credit guarantees for sustainable growth.

Core Values







Team work

Objectives of CGS

The CGS is one of the strategies in the Vision 2030 and has three key objectives aimed at promoting high levels of savings to finance Kenya’s investment needs. These are-

  1. To improve and stimulate the economy by encouraging additional lending to MSMEs, increasing investment opportunities for MSMEs and strengthening skills and capacities of proprietors of MSMEs.
  2. To create a conducive business environment and promote partnerships between the government and financial intermediaries with respect to credit guarantees for MSMEs and other related activities.
  3. To facilitate the financing of MSMEs, increasing investment opportunities for MSMEs by partially guaranteeing credit advanced to the enterprises.

1. What is a Credit Guarantee Scheme (CGS)?

A Credit guarantee scheme is a mechanism where a third party, who is the guarantor, pledges to repay part or the entire loan amount to the lender in case the borrower defaults. The Scheme as established in Kenya is to stimulate the national economy by encouraging additional lending to MSMEs and to promote partnership between GoK and Participating Financial Intermediary (PFIs) with respect to MSME lending.

2. What is the role of CGS?

The role of CGS is to assist Micro, Small and Medium-sized Enterprises (MSMEs) to gain access to credit, and to complement the Government’s efforts in promoting and developing business sectors which are key in stimulating the economy.

3. What are the benefits of the Credit Guarantee Scheme?

• Improve access to credit
• Integration of MSMEs to the formal financial market
• Mobilization of capital for MSMEs
• Relaxation of some loan requirements
• Improve the credit market
• Encourage favorable interest rates.

4. How does CGS help MSMEs?

• CGS cushions the MSMEs by providing part guarantee coverage for qualifying credit facilities.
• CGS encourages participating financial intermediaries to reach out to more MSMEs in the economy.
• CGS supports participating financial intermediaries to accord flexible repayment period MSMEs.
• CGS supports banks to provide credit to MSMEs at affordable interest rates.

5. How do I qualify for a CGS credit facility? You can qualify for a CGS credit facility if your enterprise is:

(a) a Micro, Small or Medium enterprise;
(b) registered as a business or company under the relevant laws;
(c) registered by a county government and holds a valid business permit or trade license;
(d) registered taxpayer and is in compliance with the relevant tax laws;
(e) borrowing for business purposes, including working capital requirements of the enterprises; acquisition of assets; or rebuilding businesses affected by natural disasters or other financial crises
(f) credit worthy;
(g) doing business in Kenya;
(h) not part of any group or any enterprise which would otherwise not be eligible for credit guarantee under the law; and
(i) not involved in any of the prohibited activities.

Women, Youth and Persons living with Disability are encouraged to apply.

6. How much credit can I apply for, under the CGS?

The maximum amount you can apply for under CGS is up to KShs. 5 million.

7. How do I apply for a CGS credit facility?

You can apply for a business credit facility from any of the participating financial intermediaries branch network.
Upon appraisal, the intermediary will make a decision if your business qualifies to be placed under the CGS.

8. Which financial intermediaries are participating in the CGS?

The financial intermediaries participating in the CGS are the following commercial banks:
(i) Absa Bank
(ii) Credit Bank
(iii) Diamond Trust Bank
(iv) KCB Bank
(v) NCBA Bank
(vi) Stanbic Bank
(vii) The Cooperative Bank

9. Are other financial intermediaries going to join the CGS?

Yes. Other financial intermediaries are anticipated to join the CGS in the next phase.

10. Does the CGS have collateral requirements?
Collateral requirements are as per the participating financial intermediaries’ collateral policy. Borrowers may negotiate with the banks to be considered for a reduced collateral requirement under the CGS.

11. Can I borrow for personal consumption under the CGS?

The credit facility under the CGS is intended for business purposes only.

12. Is the CGS facility a grant?

The CGS facility is not a grant, it is similar to a credit facility from a financial intermediary and has to be repaid.

13. How many times can I access the facility?

Two facilities under the Scheme cannot run concurrently. However, borrowers may borrow again after they have completed repaying the existing loan.

14. Are there any consequences if a borrower uses the money for other purposes other than business?

Yes, if the borrower: Willfully applies the funds to any other purpose other than the purpose for which the credit was approved; after securing the loan, knowingly destroys or misappropriates any security given; knowingly gives false information; or willfully destroys any assets used as collateral by a participating financial intermediary, is liable on conviction, to a term of imprisonment not exceeding five years or to a fine not exceeding Ksh. 10 Million or to both.

The National Treasury

P.O Box 30007-00100


Tel. +254-20 2252299


Skip to content