Barclays Bank of Kenya has launched a programme that will help small and medium-sized
enterprises (SMEs) in the country to access funding and training opportunities.
The Enterprise Supply Chain Development (ESD) is expected to empower SMEs that supply
goods and services to corporate organisations through funding and training .The beneficiaries will join the programme through referrals from the Corporates.
James Agin, Barclays Corporate and Investment Director, said that they have set aside KES135 million to support 50 SMEs in the pilot phase that will run upto the end of the year.
“This programme will finance SMEs that supply goods and services to corporates on the basis of a valid contract, thus enabling them to grow and make a bigger contribution to the economy. We are alive to the challenges these businesses face and have made it our responsibility to innovatively develop solutions that we believe can support their growth and help them prosper,” Mr. Agin said.
According to the Kenya Private Sector Alliance (KEPSA), the SME sector has become the key driver of economic growth, contributing up to 98% of GDP and employing more than 50% of the country’s workforce.
Barclays Bank has realised that in order for the economy to grow, the SME sector must also grow. This is in line with its shared growth agenda, which aims to have a positive impact on society while at the same time delivering shareholder value, hence the launch of ESD. Mr. Agin says that the programme will be anchored on three pillars: financial inclusion, enterprise development through training and market access.
“We will make the programme available to SMEs in all sectors of the economy and will work on a closed loop contractual-based lending. This means that lending to SMEs will be done on the basis of confirmed contracts,” he said.
“We are offering a cocktail of incentives to these small businesses, including funding, business skills, cash management and post loan management training,” Mr. Agin added.
Gertrude’s Children’s Hospital chief accountant Baraka Kerich said that they joined the
programme and referred some of their suppliers to Barclays as a way of strengthening their
value chain.
“We are working with several SMEs that we have seen to be reliable and valuable within our
value chain. Sometimes we have seen them struggle to meet our orders and, for this reason, we felt the programme would really work well for them. On our part, this will reduce the financial pressures these SMEs have always exerted on us, meaning that I will have easier overdraft terms,” Mr. Kerich said.
David Osore, a director at Phil & Ernst, a medical equipment supplies company that has
benefited from the programme, said that they are excited to be a part of the programme.
“We were referred to it by one of our key clients, Gertrude’s Children’s Hospital. As an SME, our growth has been hindered by the lack of funds and inadequate technical skills. The capping of interest rates that came into force last year did not do us any favours, as it worsened the credit crunch. We now hope that, through this programme, we will meet our needs and expand,” Mr. Osore said.
SMEs that are interested in growing and expanding their value chains and those that have been in business for a minimum of two years and have serviced at least three contracts with the selected corporate satisfactorily are eligible to join the ESD programme upon referral.
Both the corporates and the SMEs will be required to operate an account with Barclays to allow the bank to monitor the growth of the SME, from when it accesses the funds to when it repays it. These updates will ease the recovery of the funds.
Kenya is the second African country in which Barclays has rolled out the programme in addition to South Africa. The bank hopes to replicate it in the other African countries it operates in, giving businesses an opportunity to access funds through its existing products like bank guarantees, letters of credit, short-term loans, invoice discounting and overdrafts.
