Businesses registered with the Kenya National Chamber of Commerce and Industry (KNCCI) will access long-term credit of up to Sh500 million from the Kenya Development Corporation (KDC) under a new pact signed between the two bodies.
The lowest loan amount under the plan targeting the over 3,000 KNCCI members—both SMEs and large enterprises—has been pegged at Sh10 million and the maximum at Sh500 million, at a base interest rate of nine per cent before risk premium is priced in depending on the borrower’s credit profile.
The loan facility will have a repayment period of between three and 10 years, with a grace period of between six months and two years.
Apart from the loan scheme, the State-owned KDC will also offer the option of equity financing, taking up a maximum 30 per cent stake in businesses with an exit window of no more than 10 years.
“All that will be required for the businesses to access the facility will be a registration certificate, feasibility study for start-ups and a business plan for existing businesses, identity documents and collateral requirements,” said Judith Omachar, the Deputy Director of Business Development and Advisory Services at KDC yesterday.
KDC primarily focuses on manufacturing, tourism, healthcare, energy, blue economy, climate change, post-harvest management and ICT sectors.
In June 2022, KDC and KNCCI entered into a strategic partnership to facilitate loans to SMEs, in order to address the credit constraints faced by these small enterprises which have traditionally been seen as riskier by banks compared to large, established private firms and government-owned institutions.
In Kenya, the sector is projected to contribute 50 per cent of the gross domestic product (GDP) growth in the next three years. Its rapid growth has seen it engage over 15 million employees with seven in every 10 people being employed by SMEs.