Faulu launches a new initiative to finance SMEs

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Faulu launches a new initiative to finance SMEs


A branch of the Faulu Microfinance Bank in the town of Nyeri. PICTURES | JOSEPH KANYI | NMG

Faulu Microfinance Bank has set up an initiative to boost small businesses through financing.

This comes after commercial lenders overhauled their trade finance product to offer competitive pricing and flexible collateral to improve the efficiency of the 7.4 million existing SMEs in the country.

“The importance of SMEs in the country’s economy cannot be ignored. They play a pivotal role in job creation and contribute up to 8% to GDP,” Faulu Microfinance Managing Director Apollo Njoroge said during the first SME Forum held in Thika.

“It is for this reason that we have seen fit to diversify our portfolio as a bank and, meanwhile, revamp our trade finance solutions to facilitate local and international trade and commerce options for our SMEs. .”

Some of the products reviewed include bid bonds, performance bonds and advance payment guarantees.

Some of the key changes to the above offerings include the introduction of unsecured limits for performance bonds and the consideration of preferential agent commissions on a case-by-case basis.

Despite their major contribution to economic development, SMEs face immense challenges such as access to finance, markets, information and technology, as well as lack of management skills and policies. unfavorable.

This is despite a deposit portfolio of 577.6 billion shillings and a loan portfolio of 638.3 billion shillings.

Microfinance banks control at least 5% or 33 billion shillings of the SME portfolio in Kenya, while commercial banks manage 95% worth 605 billion shillings.

To reduce risk exposure for SMEs, Faulu, guided by its Faulu 3.0 philosophy of being part of a social and economic movement transforming lives and empowering all Kenyans, will seek key partnerships with reputable underwriters.

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