Co-operative Bank of Kenya says it will issue unsecured loans of up to Sh2 million to micro small and medium enterprises to be disbursed via mobile phones.
The move comes after it obtained a $150 million (Sh15.2 billion) seven-year loan from the International Finance Corporation for onward lending to small firms.
Co-op Bank acting director for retail and business banking Arthur Muchangi said Thursday that the country’s second largest lender by market share will offer training support for the borrowing enterprises — a process to be overseen by relationship bankers to boost the small firms’ repayment capabilities.
“Co-operative Bank has committed to align itself with the regulator’s requirement that banks dedicate a minimum of 20 per cent of their lending to the MSME sector,” said Mr. Muchangi when the lender launched the loans plan.
“We are confident of delivering on this promise to MSMEs as we now have the product, the skills and most important the resources to make this a reality.”
Small and mid-sized enterprises have been hard hit following the September 2016 Small and mid-sized enterprises have been hard hit following the September 2016 ceilings on loan charges at four percentage points above the Central Bank Rate, presently at nine per cent.
Most lenders in the risk-averse industry have suspended unsecured personal loans due to a perceived higher risk of default.
This has been aggravated by higher impairment costs as a result of global accounting rules enforced last January.