Kiambu County Government in partnership with KCB Bank Kenya has launched a Sh1.3 billion revolving fund that seeks to unlock the business potential of Micro, Small, Medium Enterprises (MSMEs) in the county.
The initiative will ensure that youth, women, and other vulnerable groups in the County have access to low-interest loans and loan guarantees to grow their businesses and in the long run, improve their livelihoods.
Under the scheme dubbed Jiinue Fund, KCB Bank is to advance KShs1.3 billion to individuals and start-ups which were hard-pressed by the effects of pandemic with the county government acting as guarantor, with KShs.138 million as collateral.
The Sh138 million fund will help subsidize the interest rate from the Bank so that the borrowers can access funds at seven percent instead of the average market rate of 13 per cent. This means the County Government will guarantee 6% while business owners will take up the balance (7%). More than 5,000 Kiambu residents are expected to benefit from the financing deal.
Speaking during the launch, Kiambu County Governor Dr. James Nyoro said, “We initiated and launched this fund to match the entrepreneurial and innovative spirit of the people of Kiambu. If the level of creativity that we saw at our recently held ‘Youth Innovation Week’ is anything to go by, we are looking at our next cohort of Kiambu billionaires in the coming years, Dr. Nyoro noted.
“We are pioneering innovation in the public sector to take the risk out so that they can fully focus on business growth and income generation,” Dr. Nyoro added.
This fund targets existing MSMEs in Kiambu County where entrepreneurs will be financed according to their ability to pay based on their cash flows.
“The interest sharing, and guarantee model is one of the innovative ways the bank has developed through partnership with the county government to facilitate credit to catalyze the business growth of the entrepreneurs and enable economic recovery,” said KCB Director Retail Mrs. Annastacia Kimtai during the launch of the proposition on Friday.
“We appreciate the potential MSMEs have on the economic growth in Kenya and that is why the Bank takes a keen interest to support the sector. We see this facility as a strong cushion for small businesses in the county, something that should be replicated across the country. We hope it will boost our economic recovery and provide capital and other resources to small businesses to help them weather the crisis. If MSMEs do well, the economy does well.
Kiambu County has committed Kshs. 142 Million to the fund which now allows its residents access to subsidized loans with the county acting as guarantors for the borrowers. This will bridge the long-standing hurdle of provision of collateral when in need of business financing.
The initiative will disburse Group loans of up to Shs. 300,000, Sacco loans of up to Shs. 1 Million, Start-up financing of up to Shs. 150,000 and Existing MSMEs financing of up to KShs.1 Million.
While MSMEs contribute over 40% of Kiambu’s Gross County Product (GCP) and over 90% of employment, they still face financing challenges thus denying them an opportunity to grow exponentially.
The County Government of Kiambu will develop policies and structures that support the utilization and sustainability of the fund and also facilitate capacity building for entrepreneurs.
Jiinue Fund is expected to promote the establishment of new micro, medium and small enterprises and industries by the youth, women, persons with disabilities, and vulnerable persons. The self-sustaining fund with support from local and international financial institutions like USAID and Kenya Climate Innovation Centre.