State-owned Kenya Development Corporation (KDC) has offered Sh300 million low-cost credit to a Murang'a—based Sacco for onward lending to farmers and micro traders.
Amica Sacco, whose membership is drawn from farmers and small enterprises, will offer the loans ranging from Sh7,000 to Sh250,000 at single digit interest rate for working capital requirements.
The loans are supported by the Sh8 billion World Bank-backed Supporting the Access to Finance and Enterprise Recovery (SAFER) under KDC.
Private sector credit growth has been sluggish in recent months in the wake of Kenya’s soft economy and an increase in lending rates, forcing lenders to cut back on loans to high-risk groups such as small and micro businesses.
Under SAFER, individual traders can access between Sh7,000 and Sh150,000 while micro firms can tap credit between Sh150,001 and Sh250,000, which is repaid over a three-year period.
“The facility will enable Amica Sacco to provide crucial support to local businesses as they recover and expand, spark economic activity, and drive overall community prosperity,” said Norah Ratemo, the KDC Director -General at an event graced by Trade CS Salim Mvurya and Murang’a Governor Irungu Kang’ata.
KDC is seeking to lend billions of shillings to small and medium businesses riding on funds mobilised from various sources such as the World Bank and EXIM Bank.
It is partnering with banks and saccos to rev up micro loans.
The KDC strategy is in line with the Bottoms-up economic model, which seeks to invest in the farming sector and small businesses to help create jobs and cut poverty.
“The government is dedicated to avail affordable credit facilities to SMEs. Currently, more than 7.4 million Kenyans are engaged in the sector," Mr Mvurya said,
He added that the KDC facility will help boost farming production and value addition in Murang'a.
The bulk of the Kenyan economy is in the informal sector, with most of the small businesses relying on borrowing from friends or family. James Mbui, CEO Amica Sacco said the Sh300 million will boost flow affordable credit to micro enterprises.
Amica Sacco has more than 192,000 members, where 61 percent are farmers, 18 percent are traders, and 21 percent are in the consumer sector with a loan book of Sh7.1 billion from Sh1.1 billion in 2014.
