The Rapid Growth of SME’s and Microfinance In Kenya

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Microfinance benefits the growth of SMEs in Kenya has greatly been contributed by the latter which is type of banking service in Kenya provided to unemployed people or groups with low income, e.g., the Juakali sector, to help them improve and expand their business. Most of these people or groups have little access to banks and therefore prefer to use microfinance.

It has helped the Kenyan SMEs (Small and medium-sized enterprises) to grow in various ways and increase their income streams and profit margins. 

For instance, Since the emergence of Coronavirus, Microfinance Institutions have come in handy to help SMEs.

The following is a list of microfinance benefits to small businesses in Kenya:

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Microfinance benefits

1. Favourable interest rates Loans

Microfinance Institutions in Kenya have helped individuals and groups who cannot access loans in banks to access small loans with favourable interest rates and therefore helped them use these loans to expand their businesses. One of the best leading Microfinance Institutions in terms of giving out loans is the Faulu Microfinance. Some Microfinance Institutions, for instance, Uwezo Microfinance Bank, have come up to help farmers by providing them with Farmer Loans at flexible interest rates.

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Microfinance on an upward curve

2. Easy access to online accounts

2. Microfinance Institutions work as an alternative to banks where SMEs can opt-in and open accounts to save and access their funds easily. Most of these institutions allow one to save and access their funds through their phone. Above all, some MFIs have saving accounts that attract interest and help SME’s Growth.

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3. Personalised training

3. Some MFIs have developed ways to assist SMEs by sensitizing them on business management by giving them information about new loans, saving procedures, and other new products. Some have gone the extra mile to offer business training to SMEs.

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SME insurance

4. Best insurance options

In the quest to offer Benefits to Small Businesses, some microfinance institutions like Faulu bank have developed insurance solutions such as Life & Investment Solutions, General Insurance Solutions, and Agribusiness Insurance Solutions to protect SMEs from losses.

5. Direct employment microfinance benefits

As more Microfinance is coming up and growing, there is a need for having agents in different parts of the country, and therefore, this creates an opportunity for SMEs to be considered Microfinance benefit agents and helps them generate income.

6. Asset Financing as a microfinance benefits

6.MFIs also give SMEs access to asset financing and, therefore, help them get assets to help their business grow as they repay over time with favourable interest rates; by doing this, MFIs are helping them grow and expand their business.

Some of these microfinance institutions have developed tenders that they give to qualified SMEs. one example of the Microfinance is the  Century Microfinance Bank, which gives tenders to qualified SMEs.

List of Microfinance institutions in Kenya

  • Faulu Microfinance – Loans from Faulu are easily accessed and are processed within 24hours with low-interest rates.
  • Uwezo Microfinance Bank – suitable for those SMEs focussed on agriculture because their Farmer loans are the best option in the market.
  • Rafiki Microfinance Bank offers diaspora banking, savings, and loan services and provides affordable asset finance loans for champs and SACCOs.
  • Century Microfinance Bank offers savings and loan services to customers and specializes in agribusiness loans.
  • Kenya Women Finance Trust (KWFT) is one of the oldest and most popular and is the largest Deposit-taking microfinance institution in Kenya.

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