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Manufacturers top debt roll from the giant State agency

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Ag Director General, Kenya Development Corporation Norah Ratemo. PHOTO | DENNIS ONSONGO | NMG

Manufacturers received the largest share of loans disbursed by the Kenya Development Corporation (KDC) in 2023.

Data from the State corporation shows it disbursed Sh1.14 billion in low-cost loans last year. This amount was however only 28.6 percent of the Sh3.98 billion the company had approved for lending during the period.

KDC loaned Sh357 million or 31.3 percent of the total disbursement to manufacturers, while Sh205 million went to firms dealing in post-harvest loss management.

Read: Nairobi restaurant loses KDC tea contract to rival

Other top recipients of the parastatal’s funding were firms in the tourism sector(Sh213m) while the blue economy sector got Sh98 million.

Wholesale and retail firms received the least amount of funding from KDC during the period amounting to just Sh13 million, followed by energy firms at Sh15 million and construction firms which got Sh37 million.

KDC was established in November 2020 to merge the operations of the Industrial and Commercial Development Corporation (ICDC), Tourism Finance Corporation (TFC) and IDB Capital Limited.

The company mobilises resources from various sources for onward lending to firms at below-market interest rates and longer repayment tenures. As opposed to other State-backed lenders, KDC focuses on lending to medium and large-scale industries.

A brief from the parastatal shows that it has so far received $21 million (Sh3.37 billion) from the World Bank to support financial inclusion, $40 million (Sh6.42 billion) to support the livestock value chain and $42 million (Sh6.74 billion) for greening businesses.

Read: Manufacturers shake banks with Sh133bn loan defaults

Manufacturers are currently struggling under the weight of the increased cost of doing business due to higher taxation, increased employee statutory deductions and higher prices of fuel, electricity and raw materials.

Data shows manufacturers have overtaken traders as the biggest defaulters of commercial loans, according to data released last week by the Central Bank of Kenya (CBK).

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