- SMEs are notably crucial drivers in the economy with a contribution of about three per cent of the country's GDP.
- The sector if further projected to contribute up to 50% of the country's GDP in the next three years.
Sector players from Small and Medium-sized enterprises are calling on lenders to stop sidelining them when loaning stakeholders in a green transition drive pointing towards sustainability.
Speaking during During Diamond Trust Banks' inaugural economic and sustainability forum on Wednesday, they noted the SME sector lacks adequate access to green funding despite huge sums of funding coming from international donors.
"The banks have been assuming us on the basis of having inappropriate structures to meet funding requirements, instead of focusing on our capability as a sector towards sustainable production," said Ciiru Waithaka, Anjiru CEO and a sustainable manufacturer.
She added that they as a sector, have also been sidelined on the basis of improper tracking of business activities and having small loaning ticket sizes.
The managing partner and ESG lead, Protos Capital, Loise Musyoka also noted that SMEs are grappling with low awareness of ESG issues, giving lenders more reasons to sideline them in green funding.
"The lenders now need to incorporate grants for learning to educate these enterprises on sustainability to make them more eligible for funding," Musyoka said.
SMEs are notably crucial drivers in the economy with a contribution of about three per cent of the country's GDP.
The sector is further projected to contribute up to 50 per cent of the country's GDP in the next three years.
The players are thus urging the lenders to come up with mechanisms that would aggregate funding to the enterprises to back their efforts toward Environmental, Social and Governance (ESG) strategies.
Amidst the forum, the lender announced its commitment to sustainability drive with a plan to grow its green lending portfolio to about 25 per cent and achieve net zero carbon neutrality by 2030.
It also plans to source at least 50 per cent of its procurement needs from green vendors within its supply chain portfolio by 2030.
DTB's Group Chairman Linus Gitahi thus committed to working closely with SMEs in realisation of their sustainability goals, acknowledging the sector's capabilities in driving change.
"The move will also help businesses cut down on production costs and foster risk management, pointing towards competitiveness," Gitahi said.
KEPSA deputy CEO, Victor Ogalo reiterated that businesses, specifically SMEs in the country have been grappling with the challenges of low awareness of ESG and understanding of ESG issues.
"They also have limited access to ESG data," Ogalo said.
He further added that the lack of incentives for businesses in promoting the uptake of ESG strategies is a big concern in the country, calling for joint efforts between the lenders and the government to come up with initiatives such as the provision of data centres for information provision.
Besides looking forward to net zero goals by 2030, sustainability strategy has been lauded to be a catalyst in promoting businesses promoting growth and employment.
A public survey by the lender notes about 74 per cent of customers in the country today want to buy products from sustainable companies.
This is an increase from the 63 per cent recorded two years ago, depicting the need for businesses to act towards sustainability.
About 52 per cent of people prefer sustainable brands while at least 80 per cent prefer activities that are environmentally sustainable, the survey reads in part.