The government has started disbursing the Sh2 billion low-interest loans to Savings and Credit Cooperatives (SACCOs).
The funds are being channelled through Supporting Access to Finance and Enterprise Recovery (SAFER) project launched in March .
The money intended for onward lending to small businesses aims to increase access to financial services, enhance capabilities, and support the post-Covid-19 recovery of medium-sized enterprises (MSMEs).
SAFER, the brainchild of the government through Kenya Development Corporation (KDC) is one of four financial projects funded by the World Bank to enable Saccos provide essential financial services to local businesses, drive economic activity and fostering long-term prosperity.
The global lender typically provides loans with an agreement that the funds will be used to lend to SMEs, women-owned firms and green energy projects as part of its social and environmental impact investing.
On Wednesday, Murang’a-based Amica Sacco received a Sh300 million loan, becoming the first in the country to benefit from the state-backed credit scheme.
Cabinet Secretary Ministry of Investment, Trade and Industry Salim Mvurya said the initiative's significance adding it was necessary because it affords small firms who would not ordinarily qualify for commercial bank loans to access money for expansion.
"This partnership between the KDC and Amica Sacco exemplifies the successful collaboration between public and private entities to achieve shared objectives,’’ he said.
Principal Secretary in the Ministry Hassan Abubakar said it was the government’s wish to spur vibrant and sustained economic growth through such initiatives.
The financial backing from the SAFER Project through KDC is anticipated to spark a wave of business innovation.
KDC’s director general Norah Ratemo the corporation is dedicated to creating an environment where businesses can succeed by channeling liquidity support through wholesale loans to participating financial institutions, including regulated Savings and Credit Cooperatives (SACCOs), microfinance banks, and commercial banks.
“We will ensure that these institutions are well equipped to extend credit services to viable MSMEs,” Ratemo said.
Proponents say the initiative will have a transformative impact, enabling the entity to grow and offer even more impactful support to viable businesses, stimulate growth, and contribute significantly to the region's recovery.
KDC did not disclose the cost of the debt but noted that it would be in single-digit figures to allow for onward affordable lending to SMEs.
Amica Sacco which draws its membership mainly from farmers was formed to promote, organise and administer savings and credit solutions to allow members to accumulate savings and access loans at affordable interest rates.
James Mbui, CEO of Amica Sacco said the facility will significantly enhance its capacity to provide financial services to local businesses, contributing to the economic uplifting of businesses they serve.
The transaction marks the development of financier’s increased lending to Saccos, SMEs, and women-led enterprises, with the institution having disbursed billions of shillings to several businesses in the past three years.
