SMEs urged to take advantage of State-backed Kes8Billion guarantee scheme for on-lending

By Steve UMIDHA

The Ministry of Investments, Trade and Industry Cabinet Secretary Salim Mvurya has called on SMEs to take advantage of the Kes8billion State-backed guarantee microloans to advance their businesses.

Speaking in Muranga’ while advancing a Sh300million cheque to Amica Sacco, Mvurya noted that such loans channeled through the Kenya Development Corporation (KDC), are tailored for individual microenterprises, and will have a maximum repayment duration of 18 months, while small enterprises accessing loans under KDC’s Supporting Access to Finance and Enterprise Recovery (SAFER) Project will enjoy a longer repayment period. It is a landmark deal that will see Sacco extend loan facilities to its consumers.

Amica Sacco’s Chief executive officer, 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 Sh1.2 billion 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 Sh8 Billion 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 Sh15 Billion 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 from its credit facilities.