Boost for small businesses in Laikipia after KCB loan deal
Small businesses in Laikipia County can now access up to KES100,000 county backed loans to survive coronavirus crisis.
This follows the signing of a partnership agreement between the County Government of Laikipia and the country’s largest bank, KCB, on Wednesday.
Under this unprecedented arrangement, the County Government will pay part of the interest while business owners and cooperative societies will pay the balance.
“The interest sharing and guarantee model is one of the innovative ways the bank has developed through a partnership with the county government to facilitate credit to catalyze the business growth of the entrepreneurs and enable economic recovery,” said KCB Group Chief Operating Officer Samuel Makome.
The Bank has put aside KES2 billion to support thousands of Micro, Small and Medium Enterprises (MSMEs) in Laikipia County.
The county will pay up to 6 per cent of the interest
The fund will, however, be only available to existing MSMEs who will be financed according to their ability to pay based on their cash flows.
Laikipia County Governor Ndiritu Muriithi welcomed the move terming it as a big boost that will stimulate economic recovery in the County.
“We are excited about this partnership that will unlock the much-needed credit to businesses enabling them to have sufficient liquidity to continue their activities,” the Governor said.
“By providing loans to small businesses, we will be promoting inclusive and sustainable economic growth and employment during this crisis” he added.
County Government of Laikipia will develop policies and structures that support the utilization and sustainability of the fund and also facilitate capacity building for entrepreneurs. In addition, the county will assist in getting markets for customers who are in agribusinesses and provide a team that will monitor the customers who have borrowed to cap loan diversion.
Sources intimate to Moolah that similar deals will be signed with other counties in the coming days as the bank step-up efforts to aid economic recovery.
Coronavirus crisis is emerging as an existential threat to MSMEs across the country despite the economic stimuli package that was been announced to cushion the economy against the effect of this pandemic. In May, President Kenyatta, assented to the Tax Laws (Amendment) Bill, 2020 that raised the threshold for turnover tax to exclude small-scale traders from the presumptive tax, revised corporation tax to 25 per cent, and lowered VAT to 14 per cent.
Given these uncertain times, banks are expected to be at the frontline with key responsibility to financially accompany companies, especially the fragile segments of the economy in these trying times.
The Central Bank of Kenya Governor Dr. Patrick Njoroge recently warned that 75 per cent of SMEs have no cash to run beyond June. Consequently, they wouldn’t have money to restock, pay workers, and pay themselves.