NAIROBI, Nov. 6 (Xinhua) -- The Kenya banking sector on Wednesday launched a credit platform for small and medium-sized enterprises (SMEs)
The platform, christened Stawi, which was launched by the Kenya Bankers Association (KBA), is a mobile loan product that will allow SMEs to access unsecured credit of between 30,000 shillings (300 U.S. dollar) and 2,500 U.S. dollars at an interest rate of 9 percent per annum and repayment periods of 1 month to 12 months.
President Uhuru Kenyatta who launched the product lauded KBA's efforts in coming up with the Stawi product, adding that it is a culmination of a joint effort by both the government and the banking sector to provide affordable access to credit for SMEs.
Kenyatta expressed optimism that the lending service will help boost enterprise in the country by making access to credit cheaper and faster.
"Stawi will offer a longer repayment period to small business borrowers, thus making it easier for them to better manage their cash flows; and, therefore, grow their businesses to the next level," he said, noting that SMEs account for over 80 percent of all businesses in the country.
He noted that despite their crucial role as the bloodline of Kenya's economy, the over seven million SMEs in the country are mostly unlicensed and are therefore unable to access capital from the credit infrastructure as currently set up. And the lack of access to affordable credit is partly to blame for the estimated 90 percent of start-ups that collapse within three years of their set up.
He thus challenged more financial institutions to innovate new approaches to support SMEs instead of categorizing them as high-risk borrowers.
The president said SMEs have the potential to contribute more than the current 30 percent of the country's GDP if fully supported adding that failure to support the mostly youth managed entities risks creating social instability.
The Central Bank of Kenya has partnered with NCBA Bank, Cooperative Bank, Diamond Trust Bank and Kenya Commercial Bank to offer the scheme which is aimed at improving access to credit for MSME'S.
KBA chairman Joshua Oigara said that KBA member banks designed Stawi in response to calls for the industry to facilitate SMEs' access to finance.
He added that the association was proud to launch the product during the Inaugural Inua Biashara Day, a platform geared towards Promoting Innovative Finance for SMEs and increasing industry engagement and accountability to the MMSE sector.
The service provides entrepreneurs with a digital account for their business operations as they can manage all payments and money made from their business.