Lack of collaterals and increasing numbers of loan defaulters are affecting running of businesses in the country, a sacco player has said.
The two factors hinder progression of businesses, reducing job creation in the country, according to chairman of Biashara Sacco Society Joseph Njamuku.
Speaking when the Sacco opened a branch in Nairobi, Njamuku said he hardest hit are women and youth. He said his organization had initiated different plans to address the challenges.
One of the methods is asset financing where those interested are asked to save 30 per cent of the initial cost of asset of their interest and later financed to buy it, with the collateral being the asset itself.
On loan defaulting, Njamuku said his organization had formed a special team that closely monitors how its customers carry out their businesses and guide them to ensure they are run effectively and are able to service their loans as per the agreements.
Youth and women get loans at interest rates of 10.5 per cent compared to 12 per cent for others.
Njamuku said his Sacco which was established in 2006 by less than 200 business community members in Nyeri town has now a membership of over 125,000 with a capital base of about Sh1.5 billion. It has loaned its members more than Sh1.2 billion with the members expected to get dividend payout of 17 per cent this year.
Apart from Nairobi and Nyeri counties, the Sacco has branches in Laikipia, Embu and Kiambu Counties with plans underway to have branches in several other counties.
To offer services to members who are based in areas where the Sacco is not located, they have partnered with Equity and Family Banks where members are able to directly deposit cash in their accounts over the two banks’ counters.
