New fund to lift small businesses out of Covid-19 gloom
By Esther Dianah | October 29th 2021
Micro, Small and Medium Enterprises (MSMEs) in Kenya are set to benefit from a newly launched regional credit rotation fund.
German Sparkassenstiftung Eastern Africa (DSIK), a non-governmental organisation, has partnered with SUMAC Micro Finance Bank and Jitegemea Credit Scheme locally in disbursing loans to small businesses to help them mitigate the negative impact of Covid-19 on their operations.
The fund, which is also available in Tanzania and Burundi, will see eligible businesses benefit from two-years loans of varying amounts, depending on their ability to pay.
“The loans have a payback duration of 24 months and a grace period of two months,” said Strategy and Sustainability Expert for DSIK in Eastern Africa Robert Rowohl.
The credit facility also targets farmers and start-ups.
“Farmers are an important customer group for MFIs (microfinance institutions), especially in the rural areas. We want the people in rural areas to get financial support also. The main problem of the MSMEs is that their businesses were shut during the pandemic, and now they need fresh money to plough into their businesses,” said Mr Rowohl.
The programme will run for a period of three years, with DSIK looking to secure more funds for its continuity.
According to the Central Bank of Kenya (CBK), microfinance institutions have been hit hard by the pandemic after most of their clients who happen to be small business owners lost their livelihoods.
“Most MFIs were affected in terms of the ability to provide credit to the private sectors of the economy,” said Association of Microfinance Institutions Chief Executive Caroline Karanja.
She said the partnership would go a long way in providing much-needed working capital for the two microfinanciers.
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