Kenya’s Faulu Bank allocates US$27.4m for SME lending to spur growth

KENYA – Faulu Microfinance Bank Limited of Kenya has declared plans to lend up to US$27.4 million to micro, small and medium enterprises (SMEsagribusiness and group customers to help them recover and grow following the Covid-19 economic disruptions.

The amount includes a US$4.56 million trade finance facility the lender has rolled out targeting larger SMEs mostly in construction, trade, agribusiness and import business.

The move comes as Faulu scales up financial support to its customers mainly micro-traders and business groups totalling 150,000 Faulu customers in Kenya.

Faulu Bank Managing Director and CEO, Apollo Njoroge, said the institution is keen on providing support to SMEs given their unique financial needs as they strive to rebuild their business operations.

“Our goal is to help small businesses who form the bulk of our customer base to recover after having endured a difficult period. SMEs not only need financial support to get back their footing but also financial education and motivation to sustain a growth trajectory,” said Mr. Njoroge.

He added that small enterprises are currently grappling with acute liquidity shortage thus hampering their ability to rebuild and scale up their operations as economic activity gradually returns to normal.

Njoroge went on to explain that SME recovery is critical to Faulu’s strategy of growing revenue from this particular business segment which accounts for the largest chunk of its loan book and clientele.

“As a bank, this is an opportunity to provide financial solutions that address specific needs of our customers struggling to rebuild their businesses in a challenging environment”

Apollo Njoroge – CEO, Faulu Bank

The bank recognizes that enterprises especially micro and groups not only need funding but financial literacy to make the right decisions regarding their businesses.

 With that in mind, the lender will be organizing workshops for its customers to meet seasoned entrepreneurs and learn how they can keep their business afloat amidst the myriad of challenges they face from time.

Under trade finance, Faulu is offering a variety of products designed to enable small enterprises take advantage of emerging opportunities in local and international trade and commerce.

Such products include Local Purchase Order (LPO) and Local Service Order (LSO) financing, invoice discounting, supply chain financing, tender/bid bonds, performance bonds, advance payment guarantee, retention bond, payment guarantees and customs bonds.

“Our trade finance solutions are targeting 7,500 clients in the large SME category by providing financial security to help them win contracts and thus expand beyond recovery. For the micro enterprises and business groups that borrow by members guaranteeing each other, we have several flexible loan products,” said Njoroge.

Learning institutions will also benefit with Faulu providing financing to buy more buses so as to comply with social distancing rules. Also, the Bank will also train its SME customers on how to grow their businesses and strengthen financial risk management.

To support the agriculture sector, which is the backbone of Kenya’s economy, the bank is working with strategic partners to offer farmers the much-needed support to increase production as the country seeks to achieve food security.

In 2019, Faulu embarked on expanding its branch network in a strategic move to grow its presence across the country and grassroots reach in the counties.

The Bank is also enhancing its mobile platform to customers perform financial transactions more efficiently.

With SMEs hit hard by Covid-19 shocks including supply chain disruptions, declining consumer demand and reduced access to credit, small business owners need friendly financing models for sustainable recovery and growth.

The World Trade Organization estimates that SMEs represent over 90 percent of the business population, 60-70 percent of employment and at least 50 percent of GDP in many countries.

In Kenya, SMEs contribute 30 percent of jobs and one-third of GDP, underscoring their pivotal role in both formal and informal sectors of the economy.

Liked this article? Subscribe to DealStreet Africa News, our regular email newsletter with the latest news, deals and insights from Africa’s business, economy and more. SUBSCRIBE HERE

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.