Stawi SME Loans Borrowing Drops During COVID-19

Kevin Namunwa | Oct 2, 2020

Small and Medium Entreprises in Kenya have not been taking mobile loans using Central Bank of Kenya’s ‘Stawi’ products during the pandemic.

This has stunted the growth of the product launched by the Central Bank of Kenyan and some banks last year.

The product dubbed Stawi, offered through NCBA, Co-op Bank, DTB, and KCB, is designed to give quick credit ranging from Sh30,000 to Sh250,000 for one year at a nine percent interest rate.

The main target of this product is businesses with a turnover of between Ksh 50,000 and Ksh 250,000. It also assesses borrowers on the strength of past records and available assets.

NCBA’s chief executive John Gachora said demand has declined significantly. “We saw the uptake of Stawi slow down during the Covid-19 season,” Mr Gachora said without giving figures.

“That is not to say for Stawi alone but demand for loans has come down significantly because we are not seeing a lot of capital investments which is what Stawi was supposed to meet for the Micro, Small and Medium Enterprises.”

He added that small businesses have been among the hardest hit by the coronavirus disruption.

The product was meant to replicate the success of individual mobile loans at a business level, leveraging credit scoring based on data from mobile money platforms M-Pesa, M-Shwari and credit reference bureaus to enable banks make instant lending decisions.

Stawi is among the various efforts to help small businesses access credit for growth. The government is also working on a credit guarantee scheme to further incentivise banks to lend to SMEs.

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