Nakuru County Government has inked a deal with Kenya Commercial Bank (KCB) aimed at offering training and affordable financing to over 2,000 Small and Medium Enterprises (SMEs) within the devolved unit.

Governor Lee Kinyanjui said his administration was partnering with the bank to offer credit facilities at a 12.5 per cent interest rate per annum, out of which 5 per cent would be covered by the County Government’s Cooperatives Revolving Fund while the remaining 7.5 per cent would be catered for by the borrower.

Speaking at the County headquarters when he signed a Memorandum of Understanding with the financial institution, Kinyanjui noted that though most SMEs had been adversely affected by Covid-19 economic aftershocks, affordable financing remained a challenge due to high interests offered.

“We urge other financial institutions to realign their programmes by assisting traders to adapt to the new reality caused by the COVID-19 pandemic.

Though SMEs are the driving force of economic development in Nakuru County, accounting for 90 per cent of all businesses, 50 per cent of employment, and 40 per cent of Gross Domestic Product access to affordable finance remains a challenge to many,” noted the Governor.

He noted that lack of sufficient collateral, high cost of credit, and informal business structure had rendered most SMEs ineligible for financing, a situation Kinyanjui noted had been worsened by the Covid-19 pandemic.

“With reduced turnover and Covid-19 disruptions in the market and supply chains, many Small and Medium Enterprises are unlikely to attract affordable and quality credit under the traditional arrangements,” Kinyanjui added.

He was flanked by KCB head of Commercial Division Wanjeri Kihara, KCB Director Retail Banking Anastacia Kimutai Deputy Governor Dr Eric Korir, County Executive Committee Member for Trade and Tourism Raymond Komen Trade and County Attorney Caleb Nyamwange.

The KCB head of the Commercial Division indicated that though there existed growth opportunities for entrepreneurs in the country in the e-commerce industry, there is a need for policymakers to address factors such as high taxes and costly prices of data in some markets, made worse by relatively low-income levels.

Kihara affirmed that through the partnership, the two parties were keen to see local businesses grow beyond financial success to achieve greater social impact.

By Fred Azelwa.