How NCBA Bank Is Betting On SMEs as the True Engine of Kenya’s Economy

While many banks have chosen the well-trodden path of lending to the government, chasing risk-free returns in Treasury bills and bonds, NCBA has taken a different route. It has made a deliberate, strategic, and courageous decision to channel its resources towards small and medium-sized enterprises (SMEs)—the heartbeat of Kenya’s economy.

NCBA has set aside a dedicated fund specifically to finance SMEs and entrepreneurship. No other bank in the country has made such a bold declaration. This is not just banking; it is nation-building. For a sector that contributes nearly 40% of Kenya’s GDP and employs more than 80% of the workforce, yet is starved of affordable credit, NCBA’s move is a breath of fresh air.

Kenya’s SME ecosystem has long been trapped in a vicious cycle. Punitive policies, complex tax codes, and limited access to affordable credit have turned what should be the country’s most vibrant sector into one riddled with struggle. The government’s economic surveys show that three out of five SMEs fail within the first five years of operation, and lack of financing is consistently cited as the number one killer.

Banks have historically been reluctant to touch SMEs. The risks are perceived to be too high, the credit profiles too weak, and the paperwork too messy. Instead, the banking sector has sunk deeper into the comfort zone of lending to the government, where returns are guaranteed, and risk is close to zero. It is a safe game, but it leaves the private sector, and particularly SMEs, choking.

This is why NCBA’s commitment matters to the SME ecosystem. It signals not only belief in Kenyan entrepreneurs but also an understanding that real growth cannot come from the public sector alone. True economic expansion stems from thriving enterprises that create jobs, pay taxes, and build industries from the ground up.

Consider the irony: SMEs contribute 92% of new jobs in the country, according to the Kenya National Bureau of Statistics (KNBS), yet they receive less than 15% of total bank credit. The disproportionate allocation of capital has crippled their potential, making them dependent on shylocks, digital loan apps, and exploitative lenders charging double-digit interest rates that suffocate rather than support growth.

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NCBA is effectively stepping into a vacuum. By choosing to re-align its balance sheet in favour of entrepreneurs, it is solving not just a financing gap but also correcting a structural imbalance in Kenya’s economy. The bank is not simply disbursing loans; it is unlocking opportunity.

The SME sector has been battered by layers of punitive taxation. From turnover tax that ignores whether businesses are profitable or not, to VAT structures that tie up cash flow, to county levies that suffocate traders, the environment has often been hostile. NCBA’s funding program offers relief in an environment where government policies have been more extractive than supportive.

In addition, SMEs are plagued by bureaucracy. Opening a business, accessing compliance certificates, or simply getting licences often takes weeks if not months. For a bank to walk alongside such businesses with tailored financing and advisory support is to inject hope into a sector long abandoned.

NCBA has also understood something other lenders have missed: the resilience of entrepreneurs. Despite the hurdles, Kenya’s SME sector is innovative, adaptive, and restless. From informal kiosks in Mathare to fintech start-ups in Nairobi’s Kilimani, from small agro-processors in Eldoret to boda-boda operators in Kisumu, entrepreneurs are the true hustlers who refuse to give up.

By availing KSh 100 billion, NCBA is acknowledging this resilience and saying: “We see you, we believe in you, and we are willing to take the journey with you.” This is a radical shift in financial thinking.

And the impact will not just be individual. The multiplier effect of SME financing is immense. A single supported agro-processor creates direct employment for factory workers, indirect jobs for transporters, and stable incomes for farmers supplying raw materials. A well-funded retail shop turns into a mini-distributor, supplying smaller traders. Capital flows through supply chains, multiplying its impact.

Studies by the World Bank and IFC show that every dollar invested in SMEs generates up to three dollars in economic activity. This is why NCBA’s decision could end up being one of the most transformative interventions in Kenya’s banking history.

Moreover, supporting SMEs builds resilience in the wider economy. Reliance on government borrowing creates systemic risks. If the government defaults or struggles to repay, banks are exposed. But by spreading risk across thousands of SMEs, banks diversify and strengthen the financial system. NCBA has grasped this macroeconomic truth earlier than most.

The beauty of SME financing is also in its inclusivity. Women-led and youth-led businesses dominate the sector, yet these groups are often the most excluded from traditional finance. NCBA’s fund could unlock opportunities for millions who have been locked out, transforming not just balance sheets but entire households.

Critics will argue that the risk of SME lending is too high, that defaults will eat into profits. But history shows otherwise. When credit is structured with flexibility, when entrepreneurs are trained and supported, repayment rates are strong. Microfinance institutions across Africa have proven this for decades.

The failure has not been in SMEs but in how banks have approached them. Standard loan products designed for corporates cannot work for informal traders. NCBA’s tailored SME fund represents a recognition that banking must innovate to match the realities of entrepreneurs.

It is also about timing. Kenya is at a crossroads. The economy is struggling under high debt, reduced fiscal space, and an overtaxed citizenry. The government alone cannot deliver growth. The private sector, particularly SMEs, must step up. By taking this bold step, NCBA is positioning itself not only as a financial institution but as a partner in national development.

If 80% of Kenya’s workforce is employed by SMEs, then to ignore SMEs is to ignore Kenyans. By putting KSh 100 billion into the hands of entrepreneurs, NCBA is effectively putting money directly into households, communities, and counties.

And it is not just about loans. NCBA has complemented its financing with digital banking tools, advisory services, and partnerships that equip entrepreneurs with financial literacy. This holistic approach is what makes its strategy more sustainable.

The bank has also recognized that SMEs are diverse. The financing needs of a tech start-up in Nairobi are not the same as those of a maize miller in Kitale. Tailored products ensure that credit is relevant and effective, not just another debt burden.

NCBA’s strategy also carries a subtle rebuke to other banks. While they hoard government securities, essentially lending to the state at the expense of the people, NCBA has declared that its duty is to the entrepreneur. The message is clear: the role of banking is to serve the economy, not just the Treasury.

Imagine if other banks followed suit. If Equity, KCB, Co-op, and Absa all dedicated KSh 100 billion each to SMEs, we would unlock half a trillion shillings into the hands of Kenya’s entrepreneurs. The ripple effects would be unprecedented—massive job creation, industrial growth, and household income uplift.

Kenya’s Vision 2030 cannot be achieved on government borrowing alone. It requires private sector dynamism powered by SMEs. NCBA has positioned itself as the bank that understands this fundamental truth.

This decision is also long-term. SMEs today are the corporates of tomorrow. Safaricom began as a small start-up within Telkom Kenya. Bidco began as a small soap manufacturer. Supporting SMEs today is planting the seeds of tomorrow’s giants.

There is also a moral argument. In a country where economic inequality is widening, SME financing redistributes opportunity more evenly. It ensures that growth is not just concentrated in a few corporates but is spread across the grassroots.

NCBA is not merely writing cheques. It is building the future. A future where entrepreneurs thrive, households prosper, and the economy grows inclusively.

For years, entrepreneurs have complained about being locked out by banks. With this fund, NCBA is answering that cry. It is a statement that the bank is not just about profits, but about purpose.

And it is strategic. By embedding itself in the DNA of entrepreneurs, NCBA is cultivating loyalty and long-term relationships that will pay dividends for decades.

The bank is also demonstrating courage. In a risk-averse sector, it is taking a leap of faith. And sometimes, that is what leadership is about—going where others are too afraid to tread.

SMEs are not asking for charity; they are asking for fair access to capital. NCBA’s program provides exactly that. It is a win-win: entrepreneurs get capital, the bank grows its customer base, and the economy flourishes.

This initiative also speaks to the broader role of banks in society. Banking is not just about balance sheets; it is about enabling dreams, powering industries, and shaping destinies. NCBA has embraced this higher calling.

The question now is: will other banks rise to the occasion? Or will they continue to hide behind government securities while the economy gasps for air?

History will judge. But for now, NCBA has set a new standard. It has been shown that banking with purpose is possible. That courage in capital allocation can transform nations. That belief in entrepreneurs is a belief in the future.

Kenya’s SMEs have found an ally in NCBA. And the country has found in NCBA a bank that dares to dream alongside its people.

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