By Nicholas Nduati
There is a need for more venture capitalists as well as angel investors to partner and provide funding for the non-traditional Small and Medium Enterprises (SMEs) such as those in the creative arts and startups that do not have collateral to get them financing from banks.
This is according to NIC Bank Managing Director John Gachora who notes that policy guidelines and regulations have made it impossible for banks to provide non-secured loans to this group of entrepreneurs.
At the same time, Gachora is calling on the government to use banks to lend to SMEs and the youth given the bureaucratic nature of state funding that locks out many potential beneficiaries.
Despite the capping of interest rates on loans at 4 percent above the Central Bank Rate many small and medium enterprises are still not able to access funding from banks because they do not have collateral to secure their loans.
NIC Bank Managing Director John Gachora says there is not much banks can do to fund ideas unless the country lays the platform for more venture capitalists and angel investors and startups on the other hand agree to register their businesses.
Gachora however notes that the government could come in as a guarantor and instead of providing funding itself through avenues such as the Youth Enterprise Fund, lend through banks to reach out to non-traditional entrepreneurs and startups.
With businesses still charged other licenses that ideally should be covered under the single business permit, Industry and Enterprise Development Principal Secretary Julius Korir says by next month, these licenses would have been harmonized.
This is in addition to enabling SMEs leverage on the new procurement law to subcontract major multinationals and meet the 40 percent local resources requirement.
They were speaking during the SMEs summit in Nairobi.