Industrial and Commercial Development Corporation (ICDC), has announced a review of its cost of loans to 3.0% above the CBR (Central Bank Rate), a boon to small and medium enterprises.
The Corporation said it will effectively from charge interest on loan facilities at 13% on average which is 1% below the commercial banks’ lending rate. The move is meant to help young businesses and entrepreneurs at various stages of their business cycle to spur growth by leveraging on the medium and long term loans offered by ICDC.
ICDC has played a key role as a lead investor in the creation of many of Kenya’s companies, some well-known and listed on the Nairobi Securities Exchange like Centum Investments Ltd, Uchumi Supermarkets Ltd and Eveready (EA) Ltd as well as other companies like General Motors E.A. Ltd, Development Bank of Kenya Ltd, IDB Capital Ltd, Kenya Wine Agencies Ltd, Firestone (E. A) Ltd (Now Yana Tyres Ltd) among others.
The state-owned development finance institution said its Board had resolved to review the cost of loans after President Uhuru Kenyatta assented to law, the banking amendment Act 2015 that caps lending rates at a maximum of four percentage points above the CBR which is currently at 10%.
“Our rates and terms of lending have been modest in the industry. The average bank lending rates have been 18.3% before the commencement of the new law while ICDC has been lending at an average of 16%. The Corporation welcomes the Government’s resolve to reduce the cost of borrowing as it is set to increase the level of investments,” said Kennedy Wandera, ICDC Ag. Executive Director.
“With the decrease in the cost of borrowing, the uptake of loans across the economy is expected to go up thereby stimulating economic growth,” he added. ICDC currently offers a variety of financial products including Joint Ventures and Strategic Partnerships.
