Small businesses not out of the woods yet
KNCCI officials and Equity Group Chief Commercial Officer Polycarp Igathe (right) on October 13, 2020 during the signing of an MoU post Covid-19 financial support to businesses.
What you need to know:
- Equity Bank signed an MoU with KNCCI aimed at having the chamber’s members access credit from the lender.
- According to the MoU, the chamber will recommend businesses constituting its members for credit facilitation by the bank.
- The bank said it had set aside Sh200 billion to lend to chamber members.
Millions of small businesses continue to suffer financial starvation and the risk of closure as a result of the hit they took at the hands of Covid-19.
This is despite the government’s promise to set up a credit guarantee scheme for small and medium sized enterprises (SMEs) as a recovery measure.
Seven months since the pandemic hit the country and more than three months after gradual opening of the economy began, millions of small businesses are still suffering financial malnutrition, while thousands have already closed shop.
The Kenya National Chamber of Commerce and Industry (KNCCI) Tuesday said about three million of its member are in need of cash injection.
The association of bar owners also announced recently that some 21,000 locals, hotels and other businesses failed to reopen due to lack of cash and stock over the pandemic.
Tuesday, Equity Bank signed a memorandum of understanding (MoU) with KNCCI aimed at having the chamber’s members access credit from the lender.
“Our confidence is that it’s not reckless lending, we are starting with training. If you have not been trained you will not access the loan. We have made the businesses credit ready,” said Equity Bank’s Chief Commercial Officer Polycarp Igathe. According to the MoU, the chamber will recommend businesses constituting its members for credit facilitation by the bank, after conducting due diligence on their ability and intention to pay.
“KNCCI will issue members recommendation letters to present to the bank for loan approvals. We will support them to recover their dues as quick as possible so that they can meet the deadlines given by the banks,” KNCCI President Richard Ngatia said.
Mr Ngatia said the pandemic had forced many people out of business and that with the economic recovery slowly taking shape, demand for credit among business had grown.
The bank said it had set aside Sh200 billion to lend to chamber members.
“Financial Institutions have placed very punitive requirements for businesses to access credit which has been impossible because our members have not been in operation since early this year. Most of the requirements are pegged on the proof of cash flow, which we’ve not had,” said association of Bar Owners Secretary General Boniface Gachoka.
