Five commercial banks have teamed up to unveil a mobile loan product for micro, small and medium enterprises.
Stawi, which has been endorsed by the Central Bank of Kenya (CBK) has been developed by Commercial Bank of Africa (CBA), Diamond Trust Bank (DTB), KCB Bank, NIC and Cooperative Bank.
Entrepreneurs can access credit via the Stawi Mobile app which offers unsecured loans ranging between Sh30,000 and Sh250,000 with a repayment of up to 12 months.
The nine percent per annum interest rate could be the lowest in the market but there are other charges; a facility fees of 4 percent, insurance fees of 0.7percent of the disbursed and excise duty which is 20per cent of the facility fee, pushing the interest rate to more than the market rate of 14 percent.
Borrowers are eligible for a top-up functionality once 80 per cent of the loan borrowed has been repaid or record of accomplishment of three months’ repayment.
“Until now, lending to MSMEs has been constrained by the lack of reliable information to assess their creditworthiness. The innovation in this product is the use of all data on customers’ transactions to fill this gap. In that sense it is revolutionary,” said CBK Governor Dr. Patrick Njoroge.
The governor added that the cooperation between the five banks would allow them to reach out to a growing number of small enterprises, promoting job creation and income generation, with a multiplier effect on the economy.
The pilot phase will be two weeks and will involve 3,500 traders in the MSME sector. The second roll-out will be to 10,000 traders, who will be registered by Stawi agents and will be involved in the second round of tests for the app.