Wednesday, May 24, 2006
Kenya’s small and medium-sized businesses can tap into a Sh1.7 billion regional fund launched by a group of local and international companies.It will be made available in loans and business development assistance through managerial training.Dubbed ’Aspire Kenya’, the initiative has been jointly established by GroFin, an African specialist business developer and financier, and Shell Foundation. Small Ugandan and Tanzanian firms will also benefit.
GroFin will co-ordinate the disbursement of the money and manage the fund.
“The main aim is to “build better businesses” a cross the SME sector. It is already open for business and actively looking for SMEs that require both business development assistance and finance,” said Kenneth Onyando, GroFin’s Kenya country director.
The model is designed to replicate a similar one run in South Africa by the two companies, which the group says is a success.
The concept is meant to finance SMEs by making loans available without necessarily demanding a collateral in the range of from Sh3.6 million to Sh71 million. The Kenyan chapter is co-financed by Commercial Bank of Africa (CBA), which has put in Sh426 million.
Other investors in strategic partnership include the Netherlands Development Company (FMO), an international development bank which invests in risk capital in companies and financial institutions in developing countries.
Also involved are CDC of Britain, Triodos Renewable Energy Development Fund and BIO, a Belgium government development financial institution.
The group target SMEs in all sectors but has a 40 per cent focus on SMEs in the energy sector and 10 per cent in those involved in clean energy activities.
In advancing loan the group will provide managerial skills by seconding their trained personnel to inject managerial skills into business, thus taking care of their finances.
Said Mr Onyando: “SMEs lack the business skills, track record and/or collateral to meet the existing lending criteria of local banks. By delivering a combination of business development assistance and finance, Aspire Kenya can overcome those problem.”
The loans will be channelled through the Commercial Bank of Africa at the prevailing market interest rate, but with repayment pegged on performance.