Barclays Bank of Kenya yesterday launched the Enterprise Supply Chain Development (ESD) a program meant to provide funding to Small and Medium Scale Enterprises (SME’s) which supply goods to corporate organizations. Kenya becomes the second market in which Barclays Africa is launching the solution after it launched the same in South Africa back in 2015.
According to a report by the Kenya Private Sector Alliance (KEPSA) the SME sector contributes upto 98% of the national GDP and employs more than 50% of the workforce. This basically makes this sector a key driver of the economy.
However, growth of SME’s has been hindered by lack of access to funds and inadequate technical skills. The interest rate which came into being last year did not do SME’s any favors as was intended but has worsened the credit crunch. This is because banks have shied away from lending to this sector due to its risky nature.
Barclays on its part has realized that in order for the economy to grow the SME sector needs to grow. This in line with their Shared Growth Agenda which aims to have a positive impact on society while at the same time delivering shareholder value which is basically profits. Hence the launch of the ESD which works to provide funding and training to SME’s. The ESD will be anchored on three pillars that is financial inclusion, business development and access to markets.
The ESD will be available to SME’s in all sectors of the economy and will work on a closed loop contractual based lending. This basically means that lending to SME’s will be done on the basis of confirmed contracts. For it to work both the corporate and SME will have to open accounts in Barclays whereby the bank will be able to see the process end to end. That means that they can be able to tell whether the corporate can be able to pay the SME at a certain date and after the SME has been paid they can be able to recover the funds advanced with ease. To this end Barclays Kenya has set aside a total of Ksh. 150 Million which will be advanced to 50 SME’s during this financial year.
The ESD program is targeted towards the following; corporates that are interested in strengthening their value chains, SME’s which are reliable and valuable suppliers within the corporate value chain, SME’s which are interested in growing and expanding their value chains plus those that have been in business for a minimum of 2 years and have serviced at least 3 contracts with the selected corporate satisfactorily.
Here is how SME’s stand to benefit;
- Increased access to funding opportunities especially at this time when there is a credit crunch due to the interest rate cap.
- Access to business skills training and development plus wider networking opportunities as the SME’s come together during trainings.
- Market development by creating sustainable and long term access to wider market for goods and services. SME’s will have access to the various corporates within the program allowing them to cross sell their products.
- Access to mobile and internet banking, cash management products and post loan management provided by the bank.
- Access to customized training programmes for beneficiaries in order to equip the businesses with skills needed to respond to emerging challenges and opportunities in a proactive and nimble manner.
As an individual who owns a SME, I have to say that I am excited about this new product from Barclays Bank. This is because not only will they provide funding but they will also provide training on how to make your business a success.