This is my take on ‘Stawi’, the new subsidised lending scheme where the Central Bank of Kenya (CBK) has partnered with five commercial banks to launch a mobile loan product targeting small and medium business operators.
History and experience in this country have taught us that subsidised credit schemes based on co-mingling of public funds with private capital have not had a very good record in terms of impact. The most spectacular failure was the so-called pre-export finance facility of the early 1990s when the CBK opened a special window where commercial banks could access credit and then onlend it to exporters at subsidised rates. It opened wide opportunities for arbitrage and was badly abused.
