Nakuru County Government has inked a deal with Kenya Commercial Bank (KCB) aimed at offering training and affordable financing to over 2,000 Small and Medium Enterprises (SMEs) within the devolved unit.
Governor Lee Kinyanjui said his administration was partnering with the bank to offer credit facilities at a 12.5 per cent interest rate per annum, out of which 5 per cent would be covered by the County Government’s Cooperatives Revolving Fund while the remaining 7.5 per cent would be catered for by the borrower.
Speaking at the County headquarters when he signed a Memorandum of Understanding with the financial institution, Kinyanjui noted that though most SMEs had been adversely affected by Covid-19 economic aftershocks, affordable financing remained a challenge due to high interests offered.
“We urge other financial institutions to realign their programmes by assisting traders to adapt to the new reality caused by the COVID-19 pandemic.
Though SMEs are the driving force of economic development in Nakuru County, accounting for 90 per cent of all businesses, 50 per cent of employment, and 40 per cent of Gross Domestic Product access to affordable finance remains a challenge to many,” noted the Governor.
He noted that lack of sufficient collateral, high cost of credit, and informal business structure had rendered most SMEs ineligible for financing, a situation Kinyanjui noted had been worsened by the Covid-19 pandemic.
“With reduced turnover and Covid-19 disruptions in the market and supply chains, many Small and Medium Enterprises are unlikely to attract affordable and quality credit under the traditional arrangements,” Kinyanjui added.
He was flanked by KCB head of Commercial Division Wanjeri Kihara, KCB Director Retail Banking Anastacia Kimutai Deputy Governor Dr Eric Korir, County Executive Committee Member for Trade and Tourism Raymond Komen Trade and County Attorney Caleb Nyamwange.
Under the deal, SME entrepreneurs will be equipped with skills in online marketing opportunities, record keeping, productivity and quality management, business registration and legal issues among others. They will also be trained on maintaining books of account and making tax returns.
The County administration signed similar deals with the SBM, Diamond Trust and Stanbic banks.
Kinyanjui stated there was a growing need for entrepreneurs to join the digital market to expose Kenyan goods to the global market.
He called on the dominant small and micro-enterprise sector in the country to exploit the increased online purchases for growth.
“Now more than ever, we need to be innovative to help cushion businesses from the impact of the COVID-19 pandemic. We will commit resources to support the initiative, to train vendors and give them the tools to sell online effectively,” said Kinyanjui.
“Our partnership will also ensure that more youth, women and boda-boda operators will be empowered through digital learning which will expose them to the global market and ideas,” added the governor.
Kihara said the bank would provide free online training ranging from the basics of e-commerce to operations, marketing, finance and sales to youth and women in business as a way of countering Covid-19 disruption.
She affirmed that the partnership targets to empower women, youth and persons with disabilities through financial support for their enterprises as a way of reducing poverty and increasing household incomes within the devolved unit.
“We will give SME entrepreneurs training for periods of between 3 to 6 months and thereafter incubate their business enterprises for 18 months while offering them business development skills,” observed Kihara.
The KCB head of the Commercial Division indicated that though there existed growth opportunities for entrepreneurs in the country in the e-commerce industry, there is a need for policymakers to address factors such as high taxes and costly prices of data in some markets, made worse by relatively low-income levels.
Kihara affirmed that through the partnership, the two parties were keen to see local businesses grow beyond financial success to achieve greater social impact.
Komen revealed that a third of SMEs in the country that needed funding failed to secure loans.
“A survey conducted by the Ministry of Trade and Industrialization established that 33 per cent of small businesses had their loan applications either rejected or opted not to apply due to high-interest rates, collateral requirements and complex application procedures,” said the County Executive Committee Member for Trade and Tourism.
“According to the World Bank report on SMEs entrepreneurs, women make up nearly half of all Small and Medium Enterprises owners and 40 per cent of smallholder farm managers, yet they have less than 10 per cent of the available credit and less than one per cent of agricultural credit,” he added.
Komen urged women and youth in small and medium-sized enterprises to embrace technology in looking for new markets and communicating with stakeholders and potential clients.
“Online trading can help to make more goods and services available for consumers, increase market access for SMEs and encourage investments,” said the CEC.
