Standard Investment Bank (SIB) has ventured into trade financing for small and medium enterprises (SMEs) as fixed income investments take a hit from the downturn in the stock exchange and a weaker shilling.
The bank on Tuesday inked a deal with trade financing provider Recolte to provide collateral-free short-term financing to small firms to enable them to manage their working capital needs.
The credit solutions including local purchase order (LPO) financing, contract financing, reverse factoring and invoice discounting will be available through RecoSIB, an entity created from the partnership.
The financing will be capped at Sh200 million per project, at a monthly interest rate of five percent and a processing fee of four percent, payable in six months. ‘
‘For a long time, investment banks have restricted their activities to Capital Markets and seeing a Nairobi Securities Exchange (NSE)-backed bank offering quick liquidity solution is a great achievement,’’ said NSE chief executive Geoffrey Odundo Tuesday.
SIB has historically offered asset management, securities trading, market research, investment management and corporate finance services.
Its entry into trade financing for SMEs comes at a time the market has been bleeding following high inflation in countries such as the UK and the US, driving foreign investor exits from the NSE.
RecoSIB seeks to cater for suppliers and contractors whose growth has been hampered by stringent measures instituted by conventional short-term financiers.
“We avail the credit in a swiftly than if the contractor went to a bank. Bid bonds are availed in record 30 minutes while performance guarantees through us are available within two days,” said RecoSIB chief executive David Muia.