This archive report was first published on 6 November 2019.
On Wednesday, President Uhuru Kenyatta unveiled a new digital credit facility for Micro, Small and Medium Enterprises (MSMEs) dubbed Stawi, which aims to improve access to credit for MSMEs.
Stawi is a mobile loan product that will allow MSMEs to access unsecured credit of between Shs 30,000 and Shs 250,000 at an interest rate of 9 percent per annum.
The Central Bank of Kenya has partnered with NCBA Bank, Cooperative Bank, Diamond Trust Bank, and KCB to offer the scheme.
Speaking at the launch event, President Kenyatta expressed optimism that the lending service will help boost enterprise in the country by making access to credit cheaper and faster.
“Stawi will offer a longer repayment period to small business borrowers, thus making it easier for them to better manage their cash flows; and, therefore, grow their businesses to the next level,” President Kenyatta said.
He noted that MSMEs account for over 80 percent of all businesses in the country and that despite their crucial role as the bloodline of Kenya's economy, the over 7 million MSMEs in the country are mostly unlicensed and are therefore unable to access capital from the credit infrastructure as currently set up.
The President said that lack of access to affordable credit is partly to blame for the estimated 90 percent of start-ups that collapse within three years of their set up.
He therefore challenged more financial institutions to innovate new approaches of supporting MSMEs instead of categorizing them as high-risk borrowers.
As part of elaborate state efforts to boost MSMEs, President Kenyatta announced plans to set up Biashara Centres across the country, which will offer trade facilitation services in a one-stop-shop arrangement.
