The Kenya Development Corporation (KDC) is set to inject Ksh 7.1 billion to help small and medium enterprise invest more in innovation.
Under the program dubbed Supporting Access to Finance and Enterprise Recovery (SAFER) estbalshed in conjunction with the World Bank, the project seeks to provide access to finance for businesses in order to enhance their capabilities and support their recovery post COVID-19.
“SAFER seeks to expand Access to finances, capacity building through training and support to financial institutions and technology innovation where we will explore partnerships to integrate technology with existing physical bank branches,” said Rebecca Miano, Cabinet Secretary for Trade, Industry and Investment.
Miano added that Micro, Small and Medium Enterprises (MSMEs) encounter significant challenges when seeking funding from private financial institutions, hence the SAFER project will break down the financial barriers through policy reforms.
“Our goal is to revolutionize access to finance for MSMEs providing them with the support needed to rebound post COVID-19,” she added.
According to the International Financial Corporation (IFC), an estimated 43pc of SMEs in developing countries have an unmet financing need of nearly $4.1 trillion. Lending to MSMEs has further dropped in the post COVID-19 era due to their risky nature.
The funding will be channeled from the National Treasury to KDC for onward lending to several Participating Financial Institutions and saccos at an interest rate of 8.5pc.
Through SAFER, individual micro-enterprises will access loans ranging from Ksh 7,000 to Ksh 150,000, while small enterprises will have loans ranging from Ksh 150,000 to Ksh 250,000 with a repayment period of three years.
On Hustler Fund, the government has disbursed loans totaling Ksh 47 billion to 22 million Kenyans. The value of hustler fund defaults stood at nearly Ksh 11 billion putting the overall repayments rate of loans disbursed at 72pc.
