Loans disbursal to SMEs expected ahead of busy weeks

By Steve Umidha

Lending towards Small and Medium Enterprises (SMEs) is predicted to jump in the weeks ahead sustained by already seen consumer demand for small loans as holiday season kicks in with full schools reopening in January to also provide a busy period for lenders.

The Chief executive of micro lender Jijinge Credit, Peter Macharia said that the uptake which has been on the rise since the lifting of restriction measures in September, demand for loans will easily double the normal monthly uptake in the month of December all through to the first quarter of 2021.

“Ordinarily this is always a busy period and I expect that trend to carry on this year despite the raging impact of the coronavirus which pushed many Kenyans out of work,” said Ms. Munyiri, adding that, “It is a similar pattern we have seen since July when loans uptake significantly jumped as more businesses sought loans for operations after hurting from the pandemic.”

As a result, Mr. Macharia, says that industry players will be racing to fill financial gaps by offering loans quickly to those struggling financially as a result of the pandemic with more Kenyans still out of work and their ability to borrow is also limited.

“You should expect very busy weeks ahead and this will continue to the first quarter of 2021 with Easter Holidays also a period where Kenyans tend to spend and therefore will need to borrow to keep up with the celebrations and travel expenses,” says Macharia.

Since the month of July, the number of borrowers seeking moratorium has been growing day by day, a clear indication of just how credit squeeze has taken a toll on most Kenyans and businesses alike.

Most of these borrowers now want to hold back whatever liquidity they have with no or less cash flow and the bottom of the pyramid borrowers are also in search of fresh doses of loans to resume their businesses.

Stress in the financial sector has soared since the coronavirus pandemic hit in March with about 70 per cent of borrowers seeking a moratorium on loan repayments as their incomes dipped and savings were eroded.

The jump in the uptake of the loans emerged in a period when the economy shed more than two million jobs on the back of sluggish corporate earnings in the wake of Covid-19 economic hardships.

Kenya’s economy has been hit hard by COVID-19, severely affecting incomes and jobs with a total of 604 firms in Kenya sent workers home due to the coronavirus fallout.

It is however expected that despite the growing number of coronavirus cases not just locally but globally, things should be able to improve in the coming weeks perhaps months as more global pharmaceutical companies continue to announce discoveries of new vaccines with the potential to suppress the virus..