Faulu rolls out new initiative to finance SMEs


A Faulu Microfinance Bank branch in Nyeri town. PHOTO | JOSEPH KANYI | NMG

Faulu Microfinance Bank has rolled out an initiative to boost small businesses through financing.

This comes after commercial lenders reviewed their trade finance product to offer competitive pricing and flexible collateral to improve efficiency for the existing 7.4 million SMEs in the country.

“The significance of SMEs in the country’s economy cannot be ignored. They play a pivotal role in job creation and contribute up to 8 per cent to the GDP,” Faulu Microfinance MD Apollo Njoroge said during the inaugural SME Forum held in Thika.

“It is because of this that we saw it fit to diversify our portfolio as a bank and while at it revamp our trade finance solutions to facilitate both local and international trade and commerce options for our SMEs.”

Some of the reviewed products include bid bonds, performance bonds, and advance payment guarantees.

Among the key changes in the above offerings include the introduction of unsecured limits for performance bonds and the consideration of concessionary commissions for agents on a case-to-case basis.

Despite their major contribution to economic development, SMEs face immense challenges such as access to finance, markets, information, and technology, as well as the lack of management skills and unsupportive policies.

This is despite a deposit portfolio of Sh577.6 billion and a loan book of Sh638.3 billion.

Microfinance banks control at least 5 percent or Sh33 billion of the SME portfolio in Kenya while commercial banks handle 95 percent valued at Sh605 billion.

To reduce the risk exposure for SMEs, Faulu, guided by its Faulu 3.0 philosophy of being part of a social and economic movement transforming lives and empowering all Kenyans will seek key partnerships with reputable underwriters.

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