More than 2,000 SMEs will benefit from affordable credit facilities
The Nakuru County Government has signed an agreement with the Kenya Commercial Bank (KCB) to provide training and affordable finance to over 2,000 small and medium enterprises (SMEs) within the decentralized unit.
Governor Lee Kinyanjui said his administration is teaming up with the bank to offer credit facilities at an interest rate of 12.5% per annum, of which 5% will be covered by the county government cooperative revolving fund. while the remaining 7.5% would be taken care of. for by the borrower.
Speaking at county headquarters when he signed a memorandum of understanding with the financial institution, Kinyanjui noted that although most SMEs have been affected by the economic aftershocks of Covid-19, affordable financing remains a challenge because of the high interest offered.
“We are urging other financial institutions to realign their programs by helping merchants adapt to the new reality caused by the COVID-19 pandemic.
Although SMEs are the driving force for economic development in Nakuru County, accounting for 90 percent of all businesses, 50 percent of jobs and 40 percent of gross domestic product, accessing affordable finance remains a challenge. for many, ”noted the governor. .
He noted that the lack of sufficient collateral, the high cost of credit and the informal business structure had made most SMEs ineligible for financing, a situation which Kinyanjui said had been made worse by the Covid-19 pandemic.
“With reduced revenue and disruption from Covid-19 in the market and supply chains, many small and medium-sized businesses are unlikely to attract quality, affordable credit under the deals traditional, ”Kinyanjui added.
He was accompanied by KCB Commercial Division Chief Wanjeri Kihara, KCB Retail Banking Director Anastacia Kimutai, Deputy Governor, Dr Eric Korir, County Executive Committee Member for Commerce and Tourism Raymond Komen Trade and County Prosecutor Caleb Nyamwange.
As part of the deal, SME entrepreneurs will be equipped with skills in online marketing opportunities, record keeping, productivity and quality management, business registration and questions. legal, among others. They will also be trained in the keeping of accounting books and the production of tax returns.
The county administration has signed similar agreements with the SBM, Diamond Trust and Stanbic banks.
Kinyanjui said there is a growing need for entrepreneurs to join the digital market to expose Kenyan products to the global market.
He called on the country’s dominant small and micro-business sector to harness the increase in online shopping for growth.
“Now more than ever, we need to be innovative to help protect businesses from the impact of the COVID-19 pandemic. We will commit resources to support the initiative, train sellers and give them the tools to sell online effectively, ”Kinyanjui said.
“Our partnership will also ensure that more young people, women and boda-boda operators are empowered through digital learning which will expose them to the global market and ideas,” the governor added.
Kihara said the bank will provide free online training ranging from e-commerce basics to operations, marketing, finance and sales to young people and businesswomen as a way to counter the disruption of Covid-19.
She said the partnership aims to empower women, youth and people with disabilities through financial support to their businesses as a means of reducing poverty and increasing household income within the decentralized unit.
“We will train SME entrepreneurs for periods of 3 to 6 months and then incubate their businesses for 18 months while providing them with business development skills,” observed Kihara.
The head of KCB’s business division said that while there are growth opportunities for entrepreneurs in the country in the e-commerce industry, policymakers need to address factors such as high taxes and high data prices in some markets, compounded by relatively low income levels.
Kihara said that through the partnership, both sides want to see local businesses grow beyond financial success to achieve greater social impact.
Komen revealed that a third of the country’s SMEs that needed financing did not get loans.
“A survey conducted by the Ministry of Trade and Industrialization found that 33% of small businesses had their loan applications rejected or chose not to apply due to high interest rates, collateral requirements and complex application procedures, ”the county executive committee said. Member of Commerce and Tourism.
“According to the World Bank SME Entrepreneurs Report, women make up almost half of all small and medium business owners and 40% of smallholder farm managers, but they have less than 10% of credit. available and less than 1%. agricultural credit, ”he added.
Komen urged women and youth in small and medium-sized businesses to embrace the technology to research new markets and communicate with stakeholders and potential customers.
“E-commerce can help make more goods and services available to consumers, increase market access for SMEs and encourage investment,” CEC said.