By Christine Muchira/Release
General Motors East Africa (GMEA) and Co-operative Bank of Kenya Tuesday signed a partnership that will see SME’s receive 95% financing for Isuzu vehicles at an interest rate of 14% on reducing balance.
The partnership, which was signed at GMEA offices, is set to address the critical challenge of access to finance for SME’s allowing for flexible payment terms.
In addition to the loan facility, Asset finance borrowers will also be able to receive a working capital loan of up to a maximum of Kshs 300,000 repayable in 12 months. The Asset finance repayment period is up to 5 years.
Speaking at the signing, GMEA Managing Director Rita Kavashe noted that increasing access to financial services for SME sector is key in order to realise growth of the business.
“In the Kenyan context, small business sector is at the heart of a vibrant economy. Given the pivotal role SMEs play in fueling innovation and employment-creation, understanding the opportunities, gaps and challenges in the SME finance market is crucial to maintaining our current growth momentum. Our pact with Co-operative Bank therefore aims to address these gaps and challenges faced by SMEs,” said Rita.
Rita further added that GMEA is looking at making it easier for SMEs to be able to access financing for Isuzu vehicles that SMEs rely on to build their businesses.
“According to a 2016 study commissioned by Strathmore Business School, Kshs 2.2 million SMEs have closed down in the last five years. 73% of these SMEs were made up of motor vehicles and motorcycles repair businesses. To help reduce this, we have taken it upon ourselves to innovate ways that will make it easier for SMEs to access our products when they need it. This goes to show our commitment to the country and a promise that Tuko Pamoja Safarini in their journey to success,” she added.
Rita further commented that the challenges of doing business in Kenya cannot be solved by one company or one sector alone. But by pooling resources and sharing knowledge, leveraging on existing and new opportunities to drive long-term growth across the Kenyan economy.
Maurice Matumo, Co-operative Bank’s Director for Retail and Business Banking, laid emphasis on the importance of banks playing a key role in growing the SMEs and to an extent grow the GDP of the country.
“As the Kenyan economy is poised to embark on a period of relatively high growth, the financial sector’s role to channel credit affordably and efficiently to SMEs will become ever more central for inclusive and sustained economic development. As such, our key objective is to enable trade between larger companies and SMEs by providing better access to markets through improving access to finance,” said Matumo.
The partnership is set to run for the next 5 years.