SMEs in Kenya now have access to new loan facilities without collateral. About five Kenyan commercial banks are now backed by the Central Bank of Kenya to provide loan facilities targeting small businesses.
Under The New Loan Structure (Known as ”Stawi”)
- Micro, small and medium enterprises (MSMEs) will be allowed to access loans without collateral ranging between Sh30,000 ($297) and Sh250,000 ($2500) from the new loan product dubbed “Stawi”.
- The loans will be accessed and processed through mobile phones.
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- Unlike other mobile loans like that issued by Branch, you can request for a second loan if you have managed to pay 80% of the first loan you owe Stawi.
Interest And Repayment Period
- The loans have a repayment period of between one year and 12 months and an interest of nine per cent (9%) per year.
- Other charges to be collected upon disbursement are facility fees of four per cent, insurance cost of 0.7 per cent and excise duty at 20 per cent of the facility fee
Which Banks To Access The Loans From
The facility will initially be managed by:
- Commercial Bank of Africa (CBA)
- Cooperative Bank of Kenya (Co-op Bank)
- Diamond Trust Bank Kenya (DTB)
- KCB Bank Kenya
- NIC Group
“We are excited to work with the five banks to minimise the complexity of developing new and more accessible loan offerings as they bring much-needed capital to this underserved yet vital segment of the market,” CBK governor, Patrick Njoroge, said during the launch of the product at Nairobi’s Gikomba Market.
Pay Back In Time And Get Cash Rewards
The scheme will also see good borrowers rewarded with cash based on their borrowing profiles.
“Small and mid-size enterprises are the lifeblood of any economy, but many have struggled to secure the necessary financing to continue operations in the current economic climate,” said Ngoroge
The latest intervention is coming after private sector credit grew just 3.4 per cent in the year to February In Kenya, well behind the Central Bank of Kenya’s target rate of 12–15 per cent that is needed to support economic development.
Kenyan borrowers were recently spared a rise in the cost of loans after the CBK retained its benchmark rate at 9.0 per cent amid mounting defaults and reduced appetite for lending to individuals and small enterprises by commercial banks.
How to Apply for Stawi Loan?
- To apply for and get Stawi Loan, download the Stawi Mobile application on your phone(play storelinks will be shared when it goes live in Mid June 2019 ).
- After downloading the mobile app, register with an agent and create your wallet and request for a loan. Your loan will be issued via your wallet.
- To be among the 3500 traders who will benefit from the first round of Stawi loan that will be issued to SMEs on pilot test, register with an agent through any of the listed banks above.
Charles Rapulu Udoh
Charles Rapulu Udoh, a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.