Nakuru: 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 Kenya News Agency, the County Executive Committee Member (CECM) for Trade, Tourism, and Cooperatives, Mr. Stephen Muiruri, revealed that the money would be administered through the Nakuru County Enterprise Fund and the Nakuru Cooperative Revolving Fund. This initiative is expected to assist businesses disadvantaged by stringent bank requirements.
Muiruri explained that the Enterprise Fund would offer loans ranging from Sh50,000 to Sh200,000 with an annual interest rate of eight percent, while the Cooperative Revolving Fund would provide loans from Sh200,000 to Sh5 million at a six percent interest rate per annum. The funds are designed to enable entrepreneurs previously excluded from the financial system to access capital and develop their businesses into commercially viable entities.
The CECM emphasized that this move aims to uplift the lives of the common mwananchi by promoting financial empowerment through accessible and affordable loan programs. He encouraged small business individuals, including vegetable vendors, boda boda operators, and farmers, to take advantage of these cheap loans.
In November last year, Governor Susan Kihika’s administration operationalized the Nakuru County Enterprise Fund, which had been inactive for nearly three years until the appointment of its Board of Directors. Muiruri indicated that the new board’s unveiling marked the beginning of accessible credit for small businesses in Nakuru County.
The board comprises six members from the business community who will advise the executive on providing cheap credit to local traders. Muiruri expressed optimism that the operationalization of the funds would significantly contribute to job creation for residents and help eradicate poverty among locals.
Muiruri clarified that successful applicants to the two funds would be required to pay a fee to insure the loans. While the County Enterprise Fund and Nakuru Cooperative Revolving Fund boards would manage the funds, monetary transactions would be handled through the Kenya Commercial Bank (KCB), which has signed an agreement with the county requiring that the loan be insured.
The Nakuru County Enterprise Act 2020 mandates that applicants strictly use the loans for business purposes, with violations leading to disqualification. The Act also requires the board to allocate at least 25 percent of the Fund on investment training, technical assistance, product and market development, and technology acquisition, adoption, and utilization.
Under the agreement with the bank, loan applicants will receive free training to ensure proper management of the funds and the creation of sound investments. Muiruri stated that providing loans without necessary skills sets people up for failure, so training applicants will ensure financial support is reflected in business growth.
The Nakuru County Cooperatives Revolving Fund, founded on an Act in 2019, targets over 530 cooperatives in the county to access cheap credit, with a majority engaged in agricultural production. The County official noted that many SME players in the county had stagnated for decades due to a lack of skills or funding. He added that with Nakuru now a city, entrepreneurs should leverage such financing avenues to capitalize on opportunities arising from the city’s status.