Banks are keen to warm up to SMEs playing in business sectors that have traditionally been “blacklisted” due to high risk.
This is done through putting requirements such as proper records and documentation that can help banks rely on historical trends to make risk forecasts.
Cooperative Bank, which in 2018, launched an MSME proposition has been enhancing the training of such entities across counties to equip them to succeed when they tap loans.
Over 139,000 MSMEs had been on boarded to Co-op’s three packages — gold, silver and bronze — which are bands designed based on the entities’ business turnover.
The lender discloses that it had by September last year trained 14,665 MSME customers, held 181 non-financial services clinics, thirteen networking forums and three international business trips to support micro firms.
“We also support our customers in the MSME segment through sourcing for funds from our long-term funding partners that would ease their financing,” the lender said.
The lender’s borrowed funds hit Sh43.8 billion last September, being 67.6 per cent increase from Sh26.2 billion in September 2020.
The amount came from lenders such as IFC (Sh8.25 billion) with Co-op closing September with an MSME loan book of Sh15.32 billion or five per cent of the total loan book.
CBK data shows there were 915,115 active MSME loan accounts in the banking industry as of December 2020, with a total value of Sh638.3 billion.
Lending to MSMEs generated Sh70.8 billion for the banking industry in 2020, representing 12.2 per cent of the total income generated from lending by the banking industry.
