SME lender rises from loss

Kenya Industrial Estates (KIE) is for the first time in more than a dozen years expecting to post a profit, two years after the new management took over and kicked off a restructuring process.

Julius Mokogi, who is the managing director of the State corporation whose mandate is to develop and incubate micro, small and medium enterprises, told the Business Daily that prudent management practices have helped cut the agency’s losses.

He added that between July and June last year, losses had dropped to Sh79.6 million from Sh98 million and Sh128 million in the 2010 and 2009 respectively.

He said that thanks to better government funding, the company had also hired 34 employees, mainly credit officers and business development managers, separated the two functions and established the credit appraisal department to ensure loans are screened in a more transparent manner.

In 2010, KIE received Sh245 million, Sh400m in the current financial year and is expecting the government to provide Sh800 million in the coming year.

KIE plans to use the extra funds to issue new loans and hopes that being profitable will help the agency partner with other organisations helping it access loanable funds. (READ: KIE seeks to partners to boost funding for small businesses)

Revenue collection from sources other than interest income has improved and the company also installed an enterprise management system which, apart from helping organise the agency better, is also helping to track loans that have been issued and payments made.

“In the last two quarters we managed to register Sh7.1 million in profit and we anticipate that by the end of June this year we will have doubled that to Sh15 million,” said Mr Mokogi adding that prior to the installation of the new system un-serviced loans would go un-noticed.

Mr Mokogi said the new computer system had helped boost debt collection and reduce income leakages.

The agency, whose loan portfolio currently stands at Sh1.5 billion, joins other government agencies which were expected to make surpluses amounting to Sh87.3 billion this fiscal year according to official statistics from Treasury, compared to the previous year’s Sh76 billion.

“The measures they have put in place seem to be working,” Prof Joseph Kieyah, an analyst at KIPPRA.