NAIROBI, Kenya- President William Ruto has challenged Kenya’s banking sector to rethink how it finances small businesses, arguing that unlocking credit for micro, small and medium enterprises (MSMEs) is critical to the country’s economic transformation.
Speaking during the 2026 World MSME Day celebrations at the Kenyatta International Convention Centre (KICC) on Saturday, Ruto said Kenya’s MSMEs remain the backbone of the economy but continue to face limited access to affordable financing.
He said the country has an estimated KSh3 trillion financing gap for MSMEs, which government resources alone cannot bridge.
“Government funds can catalyse and prepare our people for credit. But government alone cannot close a Sh3 trillion financing gap. The private sector can,” Ruto said.
The President described the financing shortfall as the biggest obstacle preventing small businesses from expanding into larger enterprises capable of creating more jobs and driving industrialisation.
According to Ruto, MSMEs account for 98 per cent of businesses in Kenya, generate more than 90 per cent of non-farm employment and contribute over 40 per cent of the country’s Gross Domestic Product (GDP).
He urged commercial banks to embrace innovative lending models instead of relying solely on traditional collateral such as land titles and vehicle logbooks.
“We are turning credit history into a National Credit Score so that character and behaviour, not just a title deed or a logbook, can unlock financing,” he said.
The President cited Bangladesh’s Grameen Bank and its founder Muhammad Yunus as an example of how financial institutions can successfully lend to low-income entrepreneurs without conventional collateral.
He noted that Grameen Bank has disbursed more than US$37 billion in collateral-free loans to over 10 million borrowers, most of them women, demonstrating that innovative financing models can transform economies.
Ruto called on Kenyan lenders to view unbanked entrepreneurs as an untapped business opportunity rather than a financial risk.
“The unbanked are not a risk to be kept at arm’s length. They are a market waiting to be served,” he said.
The President also highlighted measures his administration says it has introduced to support MSMEs, including establishing a dedicated State Department for MSMEs, reducing business registration costs from about Sh50,000 to approximately Sh11,000, and enabling groups to register businesses for as little as Sh550.
He said the government has digitised more than 25,800 public services through the citizen platform to simplify access to government services.
On financing, Ruto said the Hustler Fund has so far disbursed nearly Sh90 billion to more than 27 million Kenyans while mobilising over KSh6 billion in savings.
He added that more than eight million Kenyans who had previously been negatively listed by credit reference bureaus have been given a second chance, with over two million already rebuilding their credit profiles.
The President further said the government is implementing the NYOTA programme to equip more than 800,000 young people with entrepreneurial skills, mentorship and start-up capital.
He also pointed to investments in nearly 500 modern markets across the country and said 72 products had been reserved for Jua Kali artisans under the Affordable Housing Programme, creating business opportunities worth Sh60 billion for more than 33,000 artisans.
Ruto said Kenya’s ambition is to build an economy where small enterprises evolve into globally competitive manufacturers.
“If we formalise our enterprises and finance them, we will convert 98 per cent of our businesses from survival into scale. We will turn hustlers into employers, workshops into factories, and informal traders into the hidden champions of Africa,” he said.
He urged financial institutions, entrepreneurs and policymakers to work together to unlock financing for MSMEs, saying doing so would lay the foundation for Kenya’s long-term industrial growth.