Small and Medium Enterprises (SMEs) in Nakuru are set to benefit from a Sh100 million fund established by the county government to provide cheap credit to entrepreneurs previously excluded from the financial landscape.
According to the County Executive Committee Member (CECM) for Trade, Tourism, and Cooperatives, Mr. Stephen Muiruri, the money would be administered through the Nakuru County Enterprise Fund and the Nakuru Cooperative Revolving Fund and was expected to provide loans for businesses that are disadvantaged by stringent requirements set by banks.
Muiruri explained that the Enterprise Fund would provide loans ranging from Sh50,000 to Sh200, 000 at an interest rate of eight per cent per year, while the Cooperative Revolving Fund would issue loans from Sh200,000 to Sh5 million at an interest rate of six percent per annum.
The CECM further said the funds were designed to allow entrepreneurs previously excluded from the financial landscape to access capital and grow their businesses into commercially viable entities.
He said the move was aimed at uplifting the lives of the common mwananchi by promoting financial empowerment through accessible and affordable loan programmes.
“I urge small business people, especially vegetable vendors, boda boda operators, and farmers, to take advantage of the cheap loans,” said the CECM.
In November last year, Governor Susan Kihika’s administration operationalised the Nakuru County Enterprise Fund, which had not been operational for nearly three years until when she appointed its Board of Directors.
Muiruri indicated that the unveiling of the new board had set in motion the beginning of cheap and accessible credit to small businesses in Nakuru County.
The board comprises six members from the business community who will advise the executive on the provision of the cheap credit to local traders.
Muiruri was optimistic that operationalisation of the funds would go a long way in creating jobs for the residents in addition to eradicating poverty among the locals.
While explaining that the successful applicants to the two funds would be required to pay a fee that would be used to insure the loans, the CECM clarified that although the County Enterprise Fund and the Nakuru Cooperative Revolving Fund boards would manage the monies, the monetary transactions would be handled through the Kenya Commercial Bank (KCB), which has signed a pact with the county and which required that the loan be insured.
According to the Nakuru County Enterprise Act 2020, applicants shall be strictly required to use the loans on businesses only, while flouting the regulation shall lead to their disqualification.
The Act further requires the board to spend at least 25 per cent of the Fund on investment training, technical assistance on product and market development, technology acquisition, adoption, and utilisation.
The CECM explained that under the agreement with the bank, loan applicants shall receive free training to ensure there is proper management of the funds and the creation of sound investments.
“Giving loans to people without the necessary skills is setting them up for failure. Applicants shall be trained to ensure the financial support is reflected through the growth of the businesses,” said Muiruri.
The Nakuru County Cooperatives Revolving Fund, founded on an Act in 2019, targets over 530 cooperatives in the county that would access cheap credit, a majority of them engaging in agricultural production.
The County official regretted that most players in the SME sector in the county had stagnated for decades due to lack of skills or funding, adding that with Nakuru now a city, entrepreneurs should take advantage of such avenues of financing to tap into the many opportunities arising from the city status.
By Esther Mwangi and Nicole Nduuti