Kenya Bankers Association (KBA) yesterday said with about 17 million registered SMEs contributing 25 per cent of Kenya’s Gross Domestic Product (GDP), their success is largely premised on a favourable regulatory environment and their ability to access finances.
Central Bank of Kenya governor Patrick Njoroge said SMEs are dynamic and but the problem with the banks is their laziness in pricing risk.
The conference provide a platform to discuss the funding of climate change mitigation and adaptation and climate conscious investments.
Interest rate caps have already hampered small and medium sized enterprises (SMEs) ability to access funds from banks and will significantly affect funding of green projects.
Kenya Bankers Association (KBA) yesterday said with about 17 million registered SMEs contributing 25 per cent of Kenya’s Gross Domestic Product (GDP), their success is largely premised on a favourable regulatory environment and their ability to access finances.
“Unfortunately, the recent capping of interest rates has significantly affected the SMEs ability to access finances from the banking sector. Consequently, this has also affected the growth of green finance in the country,” said KBA chief executive Habil Olaka.
Speaking in Nairobi during a one-day green finance conference, Mr Olaka said a considerable amount of capital is required to transit Kenya into a green (environmentally efficient) economy.
He said the capital must not only come from the public sector but also from the private sector through public private partnerships.
According to Kenya Green Economy Strategy and Implementation Plan, the amount of capital required for green infrastructure and key sectors such as energy, agriculture and transport by 2030 is in excess of $15 billion (Sh1.5 trillion).
Central Bank of Kenya (CBK) #ticker:CBK governor Patrick Njoroge speaking during a panel discussion said SMEs are dynamic and but the problem with the banks is their laziness in pricing risk.
“A risk to a particular SME is completely different from another SME, and the issue is that banks have not been good at pricing risks thus failing to charge the correct interest which is related to the risk that the SME is carrying,” said Mr Njoroge.
“We hope that banks will start pricing risks at individual level and start lending to SMEs despite size. Innovation is key in all areas,” added Mr Njoroge.
The conference provide a platform to discuss the funding of climate change mitigation and adaptation and climate conscious investments.
It also touched on risks climate change poses to a financial institution’s portfolio .
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