Lending institutions urged to lower interest rates

By O’Brien Kimani

Mohammed said the government has identified SMEs as a critical area for job and wealth creation

Lending institutions have been challenged to lower their interest rates to small and medium enterprises to spur economic growth.

Trade and Industrialization Cabinet Secretary Adan Mohammed says the high cost of credit in Kenya is discouraging borrowing thereby strangling economic growth.

Speaking during the launch of a Biashara smart between Kenya Commercial Bank and Telecom Company Safaricom Mohammed said that the government has identified SMEs as a critical area for job and wealth creation.

Biashara smart which is an initiative between the two institutions seeks to provide lending and business advice to micro and medium entrepreneur.

Last year a World Bank report said that more than a fifth of Kenyan banks’ net income is earned from lending to SMEs.

The bank further said that the sector if well facilitated has the potential to cut joblessness among the young people.

Mohammed says many SMEs in Kenya are still finding it difficult to access credit despite aggressive campaigns by commercial banks to tap into this sub-sector.

KCB will provide financing of up to a million shillings with Safaricom offer web hosting, data, voice and Messaging services to eligible businesses.

Interest will be charged on a client to client basis. The loan is repayable for a period of one year.

Adan says the new loan calculation formula released by the Central Bank of Kenya will lead to lower cost of credit in the country.