Diamond Trust Bank (DTB) becomes the latest financial institution to design a product for Small and Medium-Sized Enterprises(SMEs).
Almost all commercial banks, as well as several Savings and Credit Cooperative Societies (SACCOs), are now aggressively marketing their credit products to attract the attention of Women entrepreneurs, SMEs and the Youth and all fall over each other to attract the attention of this group.
Absa Bank has designed the Wezesha Account and Absa She Account on this list. Absa Bank has also developed tailor-made loan products for small businesses, including Wezesha Biashara and the Absa She Account, targeted at small business owners and women-led business enterprises.
The Absa Wezesha Biashara program will provide unsecured loans of up to KSh 10 million, up to 95 per cent asset financing, LPO and much more.
Equity Bank Group, which scooped an award for Best SME Bank in East Africa 2021 from Euromoney, has set aside a kitty worth KSH 75 billion to be lent out to SMEs at concessionary terms, at 13% interest for five years. The funds include grants and technical assistance to train small businesses. The lender said it is already funding more than 2.2 million SMEs.
The Equity Group package is backed by the financial muscle of several giant financial giants, including the African Development Bank(ADB) and Egypt’s Exim Bank.
We also have its closest competitor KCB-which also has SME Loans designed for small businesses that have no access to credit due to lack of collateral.
SACCOs are keen to turn the tables on Banks and are eyeing the eagerly awaited KSh 50 Billion Hustler Fund to level the playing field.
“We shall implement the Hustler Fund, dedicated to the capitalization of micro, small and medium-sized enterprises through Chamas, Saccos and Cooperatives to make credit available on affordable terms that do not require collateral,” said President Dr William Ruto.
He made these remarks during his inaugural speech at Kasarani Stadium after being sworn in as Kenya’s fifth president on Tuesday, September 13, 2022
The Hustler fund is to use the newly established Ministry of Cooperatives and SME Development to ensure that interested small business enterprises have secure property rights, access to finance and a supportive regulatory framework.
Captains in the cooperative sector say SACCOs are ahead of the park to roll out the Hustler Fund due to their lending models in terms of financial access, inclusivity, affordability and overall sustainability of the fund,
SACCOs anticipate that channelling the Hustler Fund through them will improve liquidity, membership and visibility.
Experts maintain that SACCOs have sufficient capacity to train beneficiaries of the Hustler fund on how to manage their finances and run their business enterprises.
According to President Dr Ruto, the Hustler Fund will be launched on December 1, 2022. Credit products will be given to SMEs on digital platforms at affordable interest rates to individuals and through Chamas, groups, Saccos and cooperatives.
“All borrowers on this platform will also participate in a short-term savings plan and long-term pensions program. Every saving made by borrowers on this platform will be merged by the government of Kenya on a 2:1 ratio to a level to be determined by the program,” said Dr Ruto.
Dr Ruto’s administration said the fund, which will run from 2022/23 to 2026/27, will provide medium-sized businesses with access to affordable finance through SACCOs, venture capital, equity funds and long-term debt for start-ups, people with disability and growth-oriented SMEs.
