NAIROBI, Kenya, Jul 6 – Kenya Commercial Bank has launched a new savings and loans product targeting Micro and Small to Medium Size businesses.
Speaking during the launch, KCB Deputy Chief Executive for Group Businesses Peter Munyiri said the new product would address the immediate and the future financial needs of the informal sector, popularly known as Jua Kali.
He said with the current economic slowdown it was upon banks to come to the aid of the sector which plays a key role in providing employment and reducing poverty in the country.
“The KCB Micro-banking proposition is our answer to the ever increasing need for banks to provide accessible and affordable banking facilities and services for what has come to be known as bottom of the pyramid market segment.”
Mr Munyiri urged the government to look at the informal sector as it strives to create jobs for the youth, and look to the Jua kali sector as it has more to offer budding entrepreneurs.
“In terms of employment generation, the opportunities are actually not in the formal sector but this so called informal sector. But my understanding is that it is a very formal sector if it is contributing close to 20 percent to the GDP,” he said.
The chief executive of Kenya National Federation of Jua Kali Association Richard Muteti concurred saying the federation was working closely with the government in an effort of mainstreaming the sector. The move is intended to harmonise operations in the sector while at the same time improving regulatory and management systems.
“In terms of GDP jua kali has the potential of contributing close to 40 percent, but that can only happen if it is working in sync with the government,” Mr Muteti said.
Through the new product, KCB will offer a special savings facility, the KCB Boresha Account tailored to meet saving needs of the micro-sector players.
The account has no minimum balance, no opening balance, no account maintenance charges and no restriction as to how much to deposit or how many times the account holder can withdraw funds. The bank will also pay interest for deposits from Sh20,000 and above.
The bank has also introduced a business loan facility; the KCB Boresha Loan under which eligible customers will be able to borrow between Sh5,000 and Sh500,000 repayable within 12 months with flexible security requirements.
“Businesses that have been in operation for over a year are most suited for the KCB Boresha loan although we will consider all applications on their own merit.”
Mr Munyiri said the KCB Micro-banking proposition would provide an avenue for the MSMEs to fast-track the growth and expansion of their business to facilitate the country’s long cherished economic development.
“This is more so true because of the expansive nature of our branch network which makes our products and services access to our target market at over 150 locations countrywide.
The informal sector plays a significant role in the economy in terms of employment opportunities and poverty alleviation. This sector generates income-earning opportunities for a large number of people.
The bank intends to roll out the program to all its country branches and to the east African region with time.
The jua kali sector is currently divided into 18 sub sectors including textile, furniture, soapstone, building metal fabricators among others.