Laikipia Co-operatives and entrepreneurs have something to smile about after a Ksh 300M kitty was launched to offer them affordable financing and business support.
The Kitty dubbed Laikipia Enterprise Fund has been launched in partnership between The Laikipia County Government and Co-operative Bank of Kenya (Co-op Bank).
The partnership is modelled around an Interest Sharing and Guarantee arrangement.
Key areas of support include;
- First, to empower cooperative in Laikipia country through affordable financing and consultancy services, to enable them have sufficient liquidity for lending to members, and strengthen their management structures
- Secondly, to support over 7,000 entrepreneurs in Laikipia County recover from the challenges of the Covid-19 Pandemic by way of affordable financing and training.
Borrowers will pay single-digit interest rates, and going by latest loan repayment trends, this plan is perhaps the most affordable lending program in Kenya today.
The low interest rate couldn’t have been possible without the interest-sharing arrangement, whereby the county government will be offering an interest subsidy of 5 percent, thereby reducing the bank lending rate from 12.1 per cent to 7.1 per cent per annum for all borrowers.
Further to this, borrowers will enjoy a reduced appraisal fee at 1.5 percent of the approved loan amount. Co-op Bank will equal three times the amount that the County Government will place in the enterprise Fund, to ensure as many borrowers gain advantage from the opportunity.
On top of financing, the bank will offer the full basket of services that include; digital banking tools, workshops for business training, and capacity building for cooperatives.
Borrowers will be required to pay the loans in 12 months for SMEs and upto 18 months for cooperatives.
Initial vetting will be conducted by the County government as envisaged in the Laikipia County Enterprise Fund Regulations. On the other hand, qualifications will be done by Co-op Bank. The Laikipia Enterprise Fund will begin straightaway.