Amica Sacco inks KES300Million loan deal with KDC to support SMEs

By Steve UMIDHA

The Kenya Development Corporation (KDC) has advanced credit facility worth Sh300Million to Muranga’ – based savings and credit cooperative society, Amica Savings and Credit ltd for on-lending, in a landmark deal that will see the Sacco extend loan facilities to its consumers.

Speaking during the ceremony at the firm’s headquarters, the Chief executive officer of Amica Sacco, Dr. James Mbui said the loan facility will reinforce the Sacco’s ability to empower local businesses, particularly in agriculture, trade, and manufacturing.

“This loan facility will go a long way in meeting our strategic plan of creating an institutional culture of excellence even as we aim to realize and hopefully surpass our Sh1.2Billion revenue target for the year,” said Dr. Mbui.

Under the plan, the State-owned development finance institution, KDC has set its loan repayment period of 10 years – a first for a local Sacco under KDC’s Supporting Access to Finance and Enterprise Recovery (SAFER) Project.

SAFER is an initiative backed by the World Bank with KDC as the implementer of the Sh8Billion funding meant to support significant financial challenges faced by Micro, Small, and Medium Enterprises (MSMEs) in Kenya, particularly in the wake of the COVID-19 pandemic.

It covers liquidity support to SMEs, de-risking lending through bolstering the national credit guarantee, and providing technical assistance and project management to participating financial institutions (PFIs), including regulated SACCOs, Micro Finance Banks, and Commercial Banks.

“The KES 300 million facility is a pivotal investment in Murang’a County’s future. It will enable Amica Sacco to provide crucial support to local businesses as they recover and expand, spark economic activity, and drive overall community prosperity,” said KDC’s Director- General Norah Ratemo during the cheque’s presentation in Murang’a.

She further noted that, the pandemic exacerbated pre-existing market failures, severely limiting MSMEs’ access to vital credit needed to sustain and grow their businesses.

The project spans 25 years, with the first five years dedicated to implementation, and is structured into three interrelated components that focus on liquidity support, de-risking lending, and providing technical assistance

KDC said it has received a total of 41 applications worth Sh15Billion loan requests from various entities, signaling an ever -increasing demand for loans in the wake of a wobbly economy and unpredictable tax policies. It said about 4 Counties have since benefitted for its credit facilities.

The Cabinet Secretary for Ministry of Investments, Trade and Industry Salim Mvurya noted that such microloans, will continue to be tailored for individual microenterprises, and will have a maximum repayment duration of 18 months, while small enterprises accessing loans through SAFER will enjoy a longer repayment period.

Noting that, such an initiative is part of an ongoing effort designed to provide Kenyans with more accessible and affordable credit, with special focus being on areas designated as arid and semi-arid.

“In particular, Drive aims at unlocking the vast potential of Kenya’s pastoral economies, while Safer—a partnership of the National Treasury, the World Bank and KDC—focuses on boosting micro, small and medium enterprises.

Thus far, Drive and Safer have served as Siamese twins providing essential financial support and technical assistance to enterprises affected by post-pandemic downsides,” said Mvurya.

“This aligns with our mission of offering innovative and accessible financial solutions to our members for their socioeconomic well-being. Beyond their financial support, KDC is also instrumental in helping us align our business operations with the Environmental, Social, and Governance (ESG) standards.

This will ensure that our financial solutions drive economic progress and enhance sustainability and ethical impact,” offered Amica Sacco’s national Chairman Jediel Kahungu.