FUNDING

Small businesses rush for Sh1.7bn Covid recovery fund

The relief loans are under a KEPSA, Mastercard Foundation deal

In Summary

•Over 200 local businesses have applied for the Covid-19 relief loans.

•Businesses are receiving interest-free loans ranging between Sh100,000 to Sh1.5 million without any collateral, and payable within six months.

A customer at a kiosk in Westlands, Nairobi/
A customer at a kiosk in Westlands, Nairobi/
Image: FILE

More than 200 Kenyan businesses have sought Covid-19 support under a loan programme run by the Kenya Private Sector Alliance (Kepsa) and Mastercard Foundation.

The first set of beneficiaries has received the loans from the $15 million (Sh1.7 billion) while several mores are under review, pending disbursement of funds”, Kepsa said yesterday.

The Mastercard Foundation Covid-19 Recovery and Resilience Programme for micro, small and medium enterprises (MSMEs) aims to benefit 400 MSMEs through the partnership with Kepsa, whose operations have been adversely affected by the pandemic.

 The beneficiaries, which include women and youth owned enterprises, receive interest-free loans unsecured ranging between Sh100,000 to Sh1.5 million payable in six months.

The trader must be a Kepsa member either directly or through a member association, and the business must have been in existence for at least six months to be eligible.

 “We are working to spur economic recovery with a focus on small businesses, and these loans can be used to restart and rebuild businesses as the pandemic-related restrictions continue to be lifted and recovery begins,” Kepsa CEO Carole Karuga said.

The programme aims to assist local businesses to weather and respond to the negative effects of the pandemic, while strengthening their resilience in the long- run.

Besides providing loans, the programme also enables MSMEs to share knowledge between them, and provides coaching to businesses on how to navigate the prevailing market disruptions.

 The programme was launched in June this year and the loan application period is expected to be closed by the end of January 2021.

The Kenya National Chamber of Commerce and Industry (KNCCI) is also part of the drive where it is running interventions that include low cost businesses loans to deserving MSMEs and a trade digital platform to support  e-commerce. 

The intervention target 15,000 direct members of KNCCI, supplemented by 85,000 KNCCI association members, especially focusing on the hawkers, the fashion industry, Jua Kali, retailers, and restaurants.

While the majority of the businesses applying for the loans are based in Nairobi county, applications have been received from 17 counties across the country.

Among those that have already received loans are businesses in real estate, insurance, retail, and education sectors, which are some of the most hard-hit sectors by the pandemic.  

Majority are women-owned businesses, with the average age of the applicants being more than 35 years.

A Kepsa survey in October showed that 64 per cent of the MSMEs surveyed had experienced high or very high negative impact on their businesses from Covid-19, which included loss of customers, liquidity challenges, high cost of operations, inability to pay salaries, and reduced labour productivity.  

“We are encouraging more business owners to apply for this facility to boost their businesses, as they are the lifeblood of our local economy,” said Lilian Mramba, Grassroots Business Funds (GBF) Regional Director for Africa.

More applications are expected  from January as most businesses are gearing to resume as the year starts.

GBF, a global impact investment organization, is the facility’s fund manager. The application process is online through a portal run by Kepsa.