Faulu Microfinance Bank has announced plans to lend up to Ksh. 3 Billion to micro, small and medium enterprises (SMEs) to help them recover from COVID-19 economic effects.

This plan includes a Ksh. 500 million trade finance facility the lender has rolled out targeting larger SMEs mostly in construction, trade, agribusiness and import business. The move comes as Faulu Bank scales up financial support to its customers mainly micro-traders and business groups, totaling 150,000 Faulu customers countrywide.

Faulu Bank MD and CEO, Apollo Njoroge, says the lender is keen on providing support to SMEs given their unique financial needs, as they strive to rebuild their business operations.

“Our goal is to help small businesses who form the bulk of our customer base to recover after having endured a difficult period. SMEs not only need financial support to get back their footing but also financial education and motivation to sustain a growth trajectory,” said Mr. Njoroge.

He added that small enterprises are currently grappling with acute liquidity shortage, thus hampering their ability to rebuild and scale up their operations.

Mr. Njoroge further explained that SME recovery is critical to Faulu’s strategy of growing revenue from this particular business segment, which accounts for the largest chunk of its loan book and clientele.

The bank recognizes that enterprises especially micro and groups not only need funding but financial literacy to make the right decisions regarding their businesses. The Bank will therefore be organizing workshops for its customers to meet seasoned entrepreneurs and learn how to keep their business afloat amidst the myriad of challenges they face from time.

Under trade finance, Faulu is offering a variety of products designed to enable small enterprises take advantage of emerging opportunities in local and international trade and commerce. Such products include Local Purchase Order (LPO) and Local Service Order (LSO) financing, invoice discounting, supply chain financing, among others.

Learning institutions will also benefit with Faulu providing financing to buy more buses so as to comply with social distancing rules. Also, the Bank will also train its SME customers on how to grow their businesses and strengthen financial risk management.

Agriculture is the backbone of the Kenya’s economy. The bank, working with strategic partners, will offer farmers the much needed support to increase production as the country seeks to achieve food security.

In 2019, Faulu embarked on expanding its branch network in a strategic move to grow its presence across the country and grassroots reach in the counties. The lender is also enhancing its mobile platform to customers perform financial transactions more efficiently.

The World Trade Organization estimates that SMEs represent over 90% of the business population, 60-70% of employment and at least 50% of GDP in many countries. In Kenya, SMEs contribute 30% of jobs and one-third of GDP, underscoring their pivotal role in both formal and informal sectors of the economy.