In a bid to make funding more affordable, the government has renewed plans to merge state managed funds. A move that will see Uwezo, Youth Enterprise Development and Women funds merged into one with the government considering creation of a Biashara Bank that will offer affordable credit to small and medium-sized companies at an affordable rate.
According to a report that was released by the Kenya National Bureau of Statistics, most startup companies avoid banks and the state funding agencies in favor of family loans to start out their business ventures. Micro, Small, and Medium Establishments Survey Report also indicates that only one percent of the country’s SMEs access credit through the government funds.
“We have youth fund, women fund that is helping startups to grow. In the near future, all these agencies will be amalgamated to one to form Biashara Bank that will target small medium enterprises. Those are plans of the government to ensure financing is available to the small medium enterprises,” Trade and Industrialization Principal Secretary Julius Korir said.
The remarks were made by the PS during a sideline event of the NIC Bank SME summit. The group managing director of the NIC bank, Director John Gachora urged SMEs to seek alternative capital channels by turning to private equity as a way of scaling up their businesses.
“We now have a sizable number of private equity funds in this country. When I speak with entrepreneurs, you are very unwilling to let go any part of the business and that is where you miss out,” Mr. Gachora stressed.
Mr. Gachora praised the latest moved by the president of assenting to the Banking amendment bill 2015 that has seen capping of interest rates which will go a long way in working to support SMEs access cheap credit.
Commercial banks, through the Kenya Bankers Association, have also agreed to put a Kshs. 30 billion fund that will be used to offer loans to SMEs at below market interest rates.