Micro, small and medium enterprises (MSMEs) are on the cusp of a credit windfall after five commercial banks agreed to open the purse, raising hopes of brighter prospects for the sector.
Commercial Bank of Africa, Cooperative Bank of Kenya, Diamond Trust Bank, Kenya Commercial Bank and NIC have launched a mobile loan product targeting small enterprises.
The sector, a key driver of the economy, suffered a rude shock when the interest rates cap was introduced, as banks withheld lending to MSMEs on grounds the enterprises were too risky because of their informal nature and lack of security for loans.
Dubbed Stawi, the loan product offers unsecured loans from Sh30,000 to Sh250,000 to be repaid in a period of one month to 12 months at nine per cent annual interest, which is lower than the prevailing 13 per cent. Borrowers are also eligible for a top-up once 80 per cent of the loan borrowed is repaid or with track record of three months’ repayment.
Initially, Stawi pilot project targets 3,500 enterprises, with second rollout eyeing 10,000 traders, who will be registered by Stawi agents.
The product couldn’t have been introduced at better time, with the country grappling with high unemployment rates. The initiative is expected to help grow small enterprises, enhance job creation and income generation and ultimately spur economic growth.
MSMEs currently employ 14.9 million Kenyans and contribute between 20 and 25 per cent to the GDP and the Stawi loans can help improve these figures.
But for the sector to spur growth, most of the money must go to areas which have a multiplier effect on the economy, such as agriculture and the manufacturing sector. It is estimated that in the near-term, the GDP will grow by 5.8 per cent driven by agriculture and MSMEs.
This new lease of life to the sector will have an even bigger impact on the economy by opening up new frontiers with potential for increasing exports for a country which has increasingly become a net importer.
This will not only bring the much-needed foreign exchange and reduce imports which threaten to turn Kenya into one big supermarket for products produced elsewhere. The appetite for importations has also seen an influx of counterfeits and illicit goods which are killing local industries.
The cornerstone of justice is premised on evidence of any wrong committed. Those with other parameters in seeking vengeance must get a taste of the law themselves. The avalanche of morbid fear the elderly in parts of this country have to shake off daily, makes a mockery of the presumption of innocent till proven guilty.
