A vibrant and expanding small business sector can be a major catalyst of inclusive growth but small and medium-sized enterprises (SMEs) have a difficult time accessing the financial services that can fuel that growth. In Kenya, traditional bank financing is often not available and private equity markets are relatively under-developed.

Required:

i) Discuss any five reasons as to why commercial banks in Kenya are hesitant to lend to SMEs. (10 marks)

ii) Enumerate any five types of banks that finance small businesses in Kenya. (4 marks)

iii) Explain the role of non-bank financial institutions in supporting SMEs in Kenya. (10 marks)