NIC boss urges SMEs ignore rates to borrow from banks

By John NjirainiSmall and Medium Enterprises (SMEs) should not shy away from borrowing funds for business expansion despite the rising interest rates.NIC Bank Managing Director James Macharia on Tuesday said that SMEs should not be afraid of borrowing even though interest rates have hit the roof in recent weeks. He urged them to negotiate with commercial banks on how to overcome the challenge."Lending rates are as elastic as possible. Despite the increase, we can work together to share the pain," he said.Revised upwardsIn recent weeks, most commercial banks have revised their base lending rates upwards after the Central Bank of Kenya raised its benchmark interest rate by a record four percentage points from seven per cent to 11 per cent to tame the freefall of the shilling. The shilling has lost about 30 per cent of its value this year, hitting a record low of Sh107 against the dollar last month. The significant rise in interest rates has translated into expensive loans. It also fuelled fears that the private sector might shy away from borrowing, which would in effect muzzle economic growth. Analysts also contend some SMEs currently servicing existing loans might default due to the pressure of high interest rates.But speaking on Tuesday at the annual NIC Entrepreneur Power Workshop, Macharia said that companies should find ways to re-organise their operations to overcome challenges like rising interest rates. Help growHe pointed out that NIC Bank is willing to work with SMEs to help them grow, and is already investing in a branch expansion program to serve them better.This year alone, the bank has opened four branches and plans to open more in the coming months. The bank is also expanding in the region, and plans are at an advance stage to launch operations in Uganda.The NIC Entrepreneur Power Workshop is an annual event aimed at supporting local entrepreneurs across all industries to provide them with a networking opportunity, skills and knowledge to grow in their businesses.

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