KCB Gets Sh1B to Insure SME Loans

KCB Bank Kenya and the Swedish International Development Cooperation Agency (SIDA) have signed an agreement to insure small business loans worth Sh1 billion.

The bank will be able to increase lending to small and medium-sized businesses that are considered risky and hence have difficulty obtaining credit thanks to the seven-year guarantee program.

Acting Director of Retail Banking at KCB Bank Michael Kung’u highlighted that the new tool will give SMEs the boost they need to access the bank’s enlarged array of SME financing choices and fully participate in the expansion of Kenya’s economy.

“We are excited about this new instrument as it offers us the flexibility to work with SMEs and the refugee population in their ambitions to support their entrepreneurial journey,” Kung’u said.

“The SME guarantee will therefore go a long way in diversifying the SMEs’ financing resources and reducing collateral requirements, thereby enabling them to play a leading role in achieving economic and social development,” he added.

Risk-sharing setups are an essential tool for lenders to fill up knowledge gaps, expand their SME lending while reducing risk, and develop expertise and a track record in working with specialised market segments like SMEs and refugees.

“Sweden’s Development Cooperation through the Swedish International Development Cooperation Agency (Sida) aims to create opportunities for better living conditions for people living in poverty and under oppression,” Swedish Ambassador to Kenya Caroline Vicini said.

“This initiative will enable Sweden’s engagement to go beyond the Official Development Assistance (ODA) and focus more on innovative financing approaches to mobilize domestic resources and external private capital to reach the most vulnerable communities in Kenya.”