Page 46 - Ramco JO SACCOStar _Vol 50.indd
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LOCAL OUTLOOK
WORLD COUNCIL OF CREDIT UNIONS
(WOCCU) partners with KUSCCO to
BOOST SACCO LENDING for SMES
Mark Matabi, Country Co-ordinator, Kenya The partnership will The partnership will improve SME
improve SME landscape landscape by identifying relevant
By Ngumbo Njoroge by identifying relevant business development services
business development networks within the catchment area of
SACCO financing for Small and services networks within the SACCOs, linking SMEs with these
Medium Enterprises (SMEs) will the catchment area of business development services and
get a major boost following a the SACCOs, linking SMEs encouraging the participation of the
partnership between the World Council of with these business SACCOs in these networks to help
Credit Unions, the global trade association development services entrepreneurs grow their businesses.
and development platform for Credit and encouraging the
Unions and KUSCCO, the umbrella body participation of the A 2014 report by the SACCO industry
for SACCOs. SACCOsinthesenetworks regulator SACCO Societies Regulatory
to help entrepreneurs Authority (SASRA) found that 63.7 per
Through the support of USAID’s grow their businesses. cent of SACCOs already have SME loan
Cooperative Development Program, the products while 67 per cent of these
partnership seeks to increase access to KNBS says this is a major hindrance were willing to expand their lending to
finance for SMEs and strengthen SACCOs. to SME growth, causing difficulty Small and Medium Enterprises.
in development of new products,
According to the Kenya National Bureau of financing existing customer orders, However, the report observed that
Statistics (KNBS), Kenya’s MSME financing marketing their business, paying SACCOs need a methodology that
gap is Sh1.9 trillion, making the Kenyan utilities and physical expansion. manages risk and overcomes obstacles
‘missing middle’ the largest in East Africa. such as lack of collateral and sound
The program dubbed, Technology financial statements, adding that they
44 | SACCO Star Magazine and Innovation for Financial Inclusion need a better understanding of industry
(TIFI, seeks greater cooperative trends.
performance through SME lending by
addressing the challenges of SACCOs’ In partnership with KUSCCO, the program
lack of familiarity with SMEs, SACCOs’ offers SME loans through KUSCCO’s
lack of tools for SME loan assessment Central Finance Fund (CFF) as well as
to address associated risks and lack of an SME finance toolkit and technology
business planning skills in SMEs. solutions to increase access for SMEs,
strengthen portfolio quality and reduce
Further, TIFI seeks to improve the operational costs.
capacity of SACCOs to provide
appropriate financial products to CFF will also offer market research to
SMEs through SME profiling, product identify the needs of the underserved
review and monitoring of business SME sector and partner with Business
performance. Development Services to support SMEs.
According to a market study conducted
by WOCCU, SMEs turn to multiple
sources for financing, with 76 per cent
receiving loans from commercial banks
and 34 per cent from SACCOs. Experts
say this means SMEs would value more
SME financing products offered by
SACCOs.
