The Government, in collaboration with the Kenya Development Corporation (KDC), the Ministry of Investment, Trade, and Industry (MITI), and the National Treasury, has initiated the Supporting Access to Finance and Enterprise Recovery (SAFER) Project.
SAFER will provide innovative financial solutions and support to MSMEs through a combination of market instruments channelled via the private sector and the Government.
This is set to boost accessibility to financial services, improve capacities, aid in the recuperation of Micro, Small, and Medium Enterprises (MSMEs) post-COVID-19, and promote sustained growth in the long term.
“The SAFER project will break down financial barriers for MSMEs through policy reforms, innovative financing, and capacity building. We are confident that through this initiative, we will ignite a spark of economic revitalization across Kenya,” Cabinet Secretary, Ministry of Investments, Trade and Industry Rebecca Miano said.
The funds will be transferred from the National Treasury to a central financial entity (KDC), which will then provide loans to various Participating Financial Institutions (PFIs). These PFIs encompass Licensed Micro Finance Institutions, Central Bank of Kenya Licensed Digital Lenders, and SACCOs, who will subsequently lend to MSMEs.
Formally referred to as the Nawiri Wholesale Loan, KDC will distribute this facility to SASRA-regulated SACCOs, Licensed Micro Finance Institutions, and Tier III commercial banks primarily dedicated to extending loans to MSMEs.
Through SAFER, individual microenterprises will access loans ranging from KES 7,000 to KES 150,000, while small enterprises can avail themselves of loans ranging from KES 150,001 to KES 250,000.
Microloans will have a tenor of up to 18 months, while small loans will extend up to three years, empowering MSMEs to manage their cash flows effectively and pursue growth opportunities.
Key components of the SAFER Project include: Innovation and liquidity support to MSMEs: This component focuses on providing immediate response to the COVID-19 pandemic by offering resilient recovery support to formal and informal sector MSMEs, especially those owned by women and youth, in sectors severely affected by the crisis.
It also includes de-risking lending to MSMEs where the component aims to mitigate the risks associated with lending to MSMEs post the COVID-19 crisis.
A part of the fund will be allocated to strengthen the national Credit Guarantee Scheme (CGS), while the remaining portion will be utilized for the establishment and funding of a Credit Guarantee Company (CGC) in compliance with Kenyan regulations.
Since its inception, KDC has played a leading role in mobilizing funds and driving economic growth in Kenya. Through strategic endeavors like SAFER, KDC seeks to advance its objective of catalyzing sustainable socio-economic progress in the nation.
The SAFER Project has received endorsement from key stakeholders such as the National Treasury, World Bank, and Participating Financial Institutions (PFIs). By collaborating with these partners, SAFER aims to make a tangible difference in the lives of MSMEs throughout Kenya.
