Co-operative Bank has rolled out engagement forums with micro, small and medium-sized enterprises (MSME) spread out across counties as it seeks to streamline their business models and make them worth lending to.
The first of such sessions was held in Nakuru County on Friday, aiming to train and equip businesses with the skills and strategies to grow their ventures in an environment that has seen many MSMEs starved of credit.
In partnership with the International Finance Corporation (IFC), the tier-one lender wants to utilise a $150 million (Sh15.2 billion) partnership programme to provide affordable financing and business training for Kenyan MSMEs.
Rolling it out in counties will help the lender tap into the many micro firms spread outside major cities and whose potential to grow has been slowed by limited financing options.
This will also offer a boost to the MSME loan book, which had in 2017 declined by nine per cent. The financier is yet to release its 2018 full-year performance.
MSMEs are seen as the bedrock of wealth creation in Kenya. Available data showing that they account for a majority of Kenya’s private sector, with many running as unregistered businesses. Lack of proper documentation has seen them shunned by the formal financial service system.
Speaking during the Nakuru County MSME customer networking forum on Friday, Co-operative Bank head of business banking Moses Gitau said the kitty will unlock support for small businesses through unsecured loans.
“We have made available the Sh15.2 billion kitty for a package of loans that include an unsecured business loan, an e-credit through our MCo-opCash App where businesses are able to borrow up to Sh2 million via their mobile phone,” said Mr Gitau.
The MSME offer will also be packaged with insurance and supported by trade services such as letters of credit, guarantees and supply chain financing. Two of the MSMEs whose representatives attended the sessions were Lanet Flour Mills and Gold Front Ltd. Both spoke of the need to bridge the knowledge gap and get funding to grow.
“There is a need for business people to have a hands-on approach to their business, know how the industry works, understand government regulations and most importantly get a good financial partner who can walk the journey with you,” said David Kahura of Lanet Flour Mills.
The forums come at a time Co-op is launching a partnership with Isuzu East Africa to finance the purchasing of Isuzu vehicles to help micro SMEs. Through the partnership, customers will get up to 95 per cent financing to purchase vehicles and allowed a two-month grace period before beginning to repay the loan.