Central Bank of Kenya has partnered with five local lenders to launch a mobile loan product targeting small and medium business operators.
Dubbed “Stawi”, the product will see customers offered unsecured loans ranging from Sh30,000 up to Sh250,000 with repayment profiles of 1-12 months, at an interest of nine per cent per annum.
The loan has a repayment period of between one and 12 months and an interest of nine per cent per annum.
The other charges to be collected upon disbursement are facility fees of four per cent, insurance cost of 0.7 per cent and an excise duty at 20 per cent of the facility fee.
The facility will initially be managed by Commercial Bank of Africa (CBA), Cooperative Bank of Kenya (Co-op Bank), Diamond Trust Bank Kenya (DTB), KCB Bank Kenya and NIC Group.
“We saw an opportunity to offer neglected yet viable Kenyan-based business additional financing options to continue day-to-day operations, and provide additional capital to maintain and establish long term growth,” said KCB Group CEO Joshua Oigara.
Traders will require the receipt of a business license or permit while the respective enterprises should be operational for at least 6-months for consideration under the innovative credit scheme.
The revolutionary approach to the financing on SMEs makes for the first open extension of credit to the perceived risky economic segment at the prevailing CBR.
The scheme will see good borrowers rewarded with cash based on their borrowing profiles.