Ruto challenges banks to unlock Sh3 trillion MSME financing gap

President William Ruto has challenged Kenya's financial sector to develop innovative lending models for micro, small and medium enterprises (MSMEs), saying affordable financing remains the biggest obstacle to the country's industrial transformation.

Speaking during the 2026 World MSME Day celebrations at the Kenyatta International Convention Centre (KICC) in Nairobi on Saturday, the President said while the government has laid the groundwork for enterprise growth, the private sector must now step in to bridge an estimated Sh3 trillion financing gap facing small businesses.

Ruto noted that MSMEs account for 98 per cent of businesses in Kenya, provide more than 90 per cent of non-farm jobs and contribute over 40 per cent of the country's Gross Domestic Product (GDP).

"In Kenya, 98% of all businesses are micro, small, or medium enterprises. They create more than 90% of our non-farm jobs and contribute over 40% of our GDP," he said.

He described the sector as the country's economic engine, insisting Kenya's industrial future will be driven by small enterprises rather than large corporations.

"The MSME is not the waiting room of our economy. It is its engine room," the President said.

Ruto said his administration had implemented several reforms to support entrepreneurs, including reducing the cost of registering a company from Sh50,000 to about Sh11,000 and digitising more than 25,800 government services through the citizen platform.

He also highlighted the Hustler Fund, saying nearly Sh90 billion has been disbursed to more than 27 million Kenyans, while over Sh6 billion has been mobilised in savings. In addition, more than two million previously blacklisted borrowers have rebuilt their credit profiles after being given a second chance through government initiatives.

The President said government interventions alone would not solve the financing challenge facing entrepreneurs.

"Government funds can catalyse and prepare our people for credit. But government alone cannot close a KSh3 trillion financing gap. The private sector can," he said.

Although commercial banks have extended about Sh1 trillion in enterprise financing over the past three years, Ruto said many micro and small businesses remain excluded from formal credit.

He urged financial institutions to rethink conventional lending models and embrace behavioural credit scoring, mobile technology and data-driven financing to reach entrepreneurs without traditional collateral.

"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 on them?" he posed.

Drawing inspiration from Bangladesh's Nobel Peace Prize laureate Muhammad Yunus and the Grameen Bank, Ruto said Kenya should adopt innovative lending approaches that recognise the economic potential of small entrepreneurs.

"The unbanked are not a risk to be kept at arm's length. They are a market waiting to be served," he said, adding that institutions that successfully finance the sector would transform both the economy and their own future.

He urged banks, entrepreneurs and policymakers to work together to unlock financing and transform Kenya into an industrial economy driven by thriving MSMEs.