Mobile lending app for SMEs registers 80,000 users in 5 months

The Kenya Bankers Association-CBK backed mobile loan app has signed up 80,000 SME’s since it piloted in May this year.

The Stawi app was officially launched on Wednesday by President Uhuru Kenyatta at the banking sector’s inaugural Inua Biashara Day

The mobile platform is an unsecured digital credit scheme which is meant to improve access to credit for MSMEs, by offering unsecured loans from between Sh30,000 to Sh250,000 with repayment periods of 1 month to 12 months, at an interest rate of nine percent per year.

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Speaking during the launch President Kenyatta lauded KBA’s efforts in coming up with the Stawi product, adding that it is a culmination of a joint effort by both the Government and the banking sector to provide affordable access to credit for MSMEs.

“Today, our efforts have borne fruit and I am confident we are going to restart this powerful engine of our economy,” the President said.

The President encouraged Small and Medium Enterprises (SMEs) to take advantage of Stawi in order to grow their businesses to the next level.

Kenya Bankers Association (KBA) chairman Joshua Oigara said that KBA member banks designed Stawi in response to calls for the industry to facilitate MSMEs access to finance.

He added that the association was proud to launch the product during the Inaugural Inua Biashara Day, a platform geared towards Promoting Innovative Finance for SMEs and increasing industry engagement and accountability to the MMSE sector.

“When compared with other mobile-based loans, you will recognize that the Stawi product is very competitively priced; in fact, Stawi is the lowest cost mobile loan for SMEs which will make it instrumental in making credit accessible to millions of business owners and youth entrepreneurs across the country,” he said.

Stawi is a solution designed for all entrepreneurs to improve access to credit aimed at growing or improving their business.

The service provides entrepreneurs with a digital account for their business operations as they can manage all payments and money made from their business.

“Inua Biashara Day is a continuation of a concerted effort by the banking industry to provide solutions that support the growth and development of SMEs with the view to ensure that Kenya’s home-grown companies remain strong and thriving entities. It is for this reason that our theme this year is “promoting innovative finance for MSMEs,”said Oigara.

SMEs play a very crucial role in Kenya’s economy with over 90 percent of all established businesses being in this category. This accounts for over three-quarters of all jobs in the economy.

However, the overall contribution to the economy is below potential at 28.5% compared to developed countries where SMEs contribute between 50% and 75% to the GDP.

The biggest impediment to growth in this sector is poor access to finance, limited credit history as well as the lack of proper skills and knowledge of product financial statements impeding SMEs ability to repay, this additionally affects SMEs ability to access markets as most information is made available mostly for the large and well-established businesses only.

KBA CEO Mr. Habil Olaka said that the industry had invested in supporting capacity building through programmes like Inuka SME which presents a unique opportunity to equip small business owners with the skills, knowledge and information to prepare them to grow and the Ybizna program.

“As an industry, we commit to continue supporting you and your businesses to thrive. We also commit to helping you go further, across counties, across borders and even globally.  We do this because we recognize that Kenya’s future is tied to the MSME sector growth” said Olaka.

Stawi, which has been endorsed by the Central Bank of Kenya (CBK) was been developed by Commercial Bank of Africa (CBA), Diamond Trust Bank (DTB), KCB Bank, NIC and Cooperative Bank.

In addition to the 9 percent interest rate, there is 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 around the commercial market rate of 14 percent.