Absa Bank Kenya has unveiled a new unsecured working capital loan platform for small and medium enterprises (SMEs) as it intensifies its lending to the sub-sector.
The platform dubbed Wezesha Stock allows distributors, wholesalers and retailers in the fast-moving consumer goods segment to access short-term funding for restocking at fixed interest rates.
Wezesha Stock is an app-based solution by the lender which works by merging e-commerce and digital financing, where SME clients are able to order for new supplies via the platform while payments are made directly by Absa to the respective manufacturers and suppliers.
Absa has on-boarded key suppliers to the platform among them, Kenya Breweries Limited and Vivo. The new platform is expected to anchor the business operations of the bank’s corporate clients, whom it refers to as anchor clients, by providing financial support to enterprises in their value chain including distributors, wholesalers and stockists.
“The product is based on conversations we have had with various clients and it helps address working capital requirements for our customers efficiently without collateral,” noted Absa Business Banking Director Elizabeth Wasuna.
The platform is expected to provide SME clients with facilities with ticket sizes of between Sh100,000 and Sh10 million with borrowers’ earnings higher credit limits based on repayments made to the platform and risk profile.
Absa says it targets to on-board an initial 2000 SMEs on the platform but has no limits on the number of corporate clients and borrowers it can onboard.
Tenures on credit extended via the platform start from seven days with interest rates charged being based on the respective business risk profile- risk-based pricing- but are fixed to minimize risks paused by a fluctuating interest rate environment.
“The interest rates right now are up to about 0.5 percent at a fixed rate. The fixed rate is because, in a changing world, you don’t want a situation where the costs are high and you can’t price your products,” added Ms Wasuna.
