€70m allocated to improve access to credit for Kenyan SMEs
The European Investment Bank (EIB) has granted a €70 million credit line to the Co-operative Bank and Housing Finance Company of Kenya to increase access to long-term funding for small to medium-sized enterprises (SMEs).The European Investment Bank (EIB) has granted a €70 million credit line to the Co-operative Bank and Housing Finance Company of Kenya to increase access to long-term funding for small to medium-sized enterprises (SMEs).
This is allocated as part of the Private Enterprise Finance Facility III scheme, the objective of which is to finance the expansion, modernisation or start-up investment costs of SMEs in Kenya, which provide 75 percent of all jobs.
According to the EIB, dedicated technical assistance funding will also be made available to help Kenyan firms seeking investment funding and improve the effectiveness of small business lending by partner banks.
A few months earlier, Equity Bank and the German Development Bank signed a €17 million agreement to grant loans to SMEs in Kenya, with interest set at between five and 12 percent depending on their credit rating, the Daily Nation reported.
Borrowing rates are currently at around 25 percent in Kenya and this has resulted in a decline in the number of loans taken out by SMEs.
Access to credit remains inadequate for these companies. However, the government's Economic Stimulus Programme has played an important part in creating credit for SMEs, according to AfricanEconomicOutlook.org.
In 2011, the government streamlined the financial sector by regulating microfinance institutions via a Business Regulation Bill to prevent the regulatory authorities from setting arbitrary charges and fees.