NAIROBI, April 2 (Xinhua) -- Kenya plans to put in place a legal and regulatory framework that will incentivize banks to extend loans to small and medium-sized enterprises (SME), officials said on Tuesday.

Peter Munya, cabinet secretary in Ministry of Industry, Trade and Cooperatives told journalists in Nairobi that small firms are not qualifying for commercial bank loans because they are perceived to have a high risk of default.

"The law which should be in place in the next four months will provide for the establishment of a credit guarantee scheme where government will insure loans extended to SMEs," Munya said on the sidelines of the African Private Equity and Venture Capital Association's 16th annual conference.

Munya said that the government is keen to ensure SMEs have access to credit in order to facilitate their expansion, adding that SMEs play a big role in the economy given that bulk of Kenyan workforce is employed by small firms.