Jijenge Credit: Fostering the lives of Kenyan SMEs

By Phyllis MUCHOKI

Kenya’s economy is set for the much-needed ricochet after the International Monetary Fund (IMF) this week revised the 2023 projections upwards from 5.1 percent as forecasted in October last year to 5.3 percent, according to the just-released World Economic Outlook.

In perspective, this means that the Fund now expects the country’s economy to grow faster than had been earlier expected.

It comes after businesses in the country showed great resolve by adapting to the challenges caused by both Russia’s invasion of Ukraine and the Covid pandemic, with those in the small business sector demonstrating particular resilience.

Read: Micro-lender-jijenge-credit-shrugs-off-inflation-jitters-looks-ahead

The projection by the IMF, according to the Chief Executive of SME – lending firm Jijenge Credit Limited, is a clear sign of a recovering economy even though it is a moderate acceleration in the economic growth momentum which the fund believes will quicken to 5.4 percent in 2024.

“This is a pretty good outlook for the country, and it can only get better with the implementation of some of the ongoing measures by the State through various agencies like the Kenya Revenue Authority as well as calls for the austerity measures,” offered Macharia – in an interview.

He, however, believes that the anticipated growth will be driven by continued lending to the SME sector which constitutes 98 percent of all business in Kenya, and creates 30 percent of the jobs annually as well as contribute 3 percent of the GDP, according to the recent National Economic Survey report by the Central Bank of Kenya (CBK).

“The SME funding will play a very vital role if those evaluations by the IMF are to be realized. At Jijenge Credit, for instance, we are expecting lending business to pick up in the coming weeks after a slow start to the year,” said Macharia.

Jijenge Credit is one of the leading asset-based finance companies in Kenya offering prompt asset loan acquisition including logbook loans, salary check-off loans, and bid bonds, import duty financing, loans on title deeds among other credit facilities.

“This sector plays an instrumental role in our economy, employing over 15 million people and contributing about 30 percent to the national value-added. Yet, it continues to face substantial challenges like limited access to finance,” notes Macharia who founded the firm nearly a decade ago.

After a promising start to the year, Macharia is convinced that small and medium-sized businesses are now planning to hire, on average, six new employees before the end of April as they prepare to grow and progress their company.

“This is already a good sign,” adding that, the already seen enthusiasm and resilience from among Kenyan entrepreneurs will indeed drive employment and investment opportunities throughout the year which looks to be a landmark year for small businesses as they focus on maximizing growth in the midst of the economic storm like the high inflation, weakening shilling, high-interest rates among others.

Microfinance, according to him remains one of the most popular modes of borrowing among borrowers today. Also called microcredit, this model he says is a type of banking service that allows people to take on reasonable small business loans safely, and in a manner that is consistent with ethical lending practices.

And like conventional lenders, micro financiers charge interest on loans and institute specific repayment plans – which are sometimes prone to default.

This is, however, particularly challenging as it puts the lender’s need for institutional survival against the difficult circumstances of the defaulting customer.

Shadow banking refers to any type of lending provided by financial institutions that are not commercial banks and not regulated as banks. Like traditional banks, shadow banks rely on short-term funds to make longer-term loans and rely on money from investors for making loans.