Coop Bank of Kenya: A Darling for SMEs

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By Amina Faki,

The recent attention on Small and Medium Enterprises (SMEs) financing comes from the perception that SMEs lack appropriate financing and need to receive special assistance, like government programs that increase lending.

Banks, in general, are not interested in dealing with SMEs and that medium and niche banks do engage with SMEs but mainly through relationship lending—holds in practice

Cooperative Bank of Kenya, has the interest of SMEs at heart. It has been and still is the pillar to the success of many SMEs in the various sectors in the country.

The financing of SMEs has attracted much attention in recent years and has become an important topic for economists and policymakers working on financial and economic development. SMEs are a key driver economic growth and employment. According to data from Kenya National Bureau of Statistics (KNBS), the sector employs three-quarters of the population and contributes to about 45 percent of Kenya’s GDP.

Lack of adequate financing and business support services have hindered the growth of such businesses. Coop Bank has been working to fill this existing market gap by tailor making products that cater to the needs of this customer segment ranging from business-specific accounts, digital banking systems and a variety of debit and credit cards with attractive rates and features.

Cooperative Bank is quite aware of the strengths of having SMEs to the Kenyan economy. They offer loan products specifically tailored for this group of businesses. What separates Co-op Bank from its peer banks in the market place is the relationship management that it offers its customers. This is the extra push and support that any entrepreneur is looking for in a partner bank.

These are some of the best examples of Coop Bank specific loans to SMEs are;

“Small businesses in the logistics sub-sector can now access loans to buy heavy commercial vehicles at affordable rates. This follows a deal between General Motors East Africa (GMEA) and Co-operative Bank of Kenya that will see SMEs receive 95 per cent financing to buy Isuzu vehicles at an interest rate of 14 per cent on reducing the balance.”

“Co-op Banks business model is very close to IFC’s heart not only because they are both committed to the SMEs sector, but also because they share a vision for agriculture as a driving force of Kenya’s economy, agriculture provides employment to over 70 per cent of Africa’s population and contributes more than 25 per cent of the continent’s GDP” Coop Bank has loan plans exclusively for small farmers.

Cooperative Bank of Kenya has put in place Bizwise products in which SMEs can sign up for and enjoy its many benefits with no maintenance fee at all.

There are no charges on standing orders and local cheque deposits. Account holders can also enjoy overdraft facilities as a stop-gap measure to bridge short-term cash flow problems in their businesses. The balance can be paid at any time without penalties and interest is only calculated on the amount utilized.

Other features for Bizwise account holders can take advantage of include:

  • Construction Loan: The loan is a mainly self-securing facility available to Co-op and non-coop clients. There are no hidden fees involved and it requires very little documentation. Hence, the application and disbursement process is very quick.
  • Asset Finance: You can qualify for financing on new and second-hand assets, and enjoy attractive rates in both local and foreign currency. The repayment period is up to 60 months. There is insurance premium financing for assets purchased with the option of periodical renewals.

There has been a sharp transformation in the way that Coop Bank interact with SMEs. Coop Bank perceives SMEs as a core and strategic business and seems well positioned to expand its involvement with SMEs.

Furthermore, most large companies usually start as small enterprises, so the ability of SMEs to develop and invest becomes crucial to any economy wishing to prosper.

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Soko Directory Team

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