Corporate News

Stima Loan helps poor families get electricity

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By DALTON NYABUNDI

Posted  Tuesday, December 4  2012 at  22:54

In Summary

  • Some 37,000 Kenyans have benefited from the loan scheme with about 5,500 being from the western Kenya region.
  • The region is sub-divided into 14 zones and disbursement is done depending on the demand and population.
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About 150 homes are connected to the power grid every month in western Kenya, thanks to Kenya Power’s Stima Loan.

The project, which was started by L’Agence Française de Dévelopement (AFD) of France through the World Bank aims to connect low-income families that cannot afford the high connection fees by giving them loans at minimal or no interest. 

In the rural areas, customers pay 50 per cent upfront while the balance is paid over a period up to 24 months. Under this scheme, beneficiaries pay no interest on the money advanced to them.

In the peri-urban areas, customers pay 20 per cent of the cost of connection upfront and are connected at preferential rates and conditions. The balance is paid in instalments over a period of up to 36 months.

Some 37,000 Kenyans have benefited from the loan scheme with about 5,500 being from the western Kenya region. The region is sub-divided into 14 zones and disbursement is done depending on the demand and population.

Christine Riaru, the marketing officer in the Kisumu zone, said that a national identity card is all one needs to secure the loan. She, however, pointed out that one can only remain connected as long as they do not default on payment.

“Rural electrification has brought the infrastructure closer to the people and hence cheaper connection costs”, Ms Riaru said.
The project thrives on revolving funds having depleted the initial grant by the World Bank.

 “We are not a credits corporation and depend solely on the revolving funds to facilitate the plan. As a consequence, therefore, the higher the default rate the lower the disbursement,” says Ms Riaru.

She cites default in repayment as the chief challenge facing the scheme and they are sometimes forced to disconnect power for defaulters. Misinformation by those seeking the loan has also been a challenge.

Statistics reveal that Kisii, Kisumu, and Kericho are among the best performers in loan acquisition and repayment in the region.

Ms Riaru further adds that Kenya Power boasts 75 per cent electricity connection in the country, a fact it owes to rural electrification programme and the Stima Loan.