The government of Laikipia county and Co-operative bank have sealed a deal that will see the cooperatives and entrepreneurs get affordable financing.
The Laikipia Enterprise Fund was launched today with an initial kitty of Sh300 million.
Co-op bank and the county administration have entered into an Interest-Sharing and Guarantee Arrangement as a way of kicking-off the fund.
It is intended to empower co-operatives in Laikipia county through affordable financing and consultancy services, to enable them have sufficient liquidity for lending to members, and strengthen their management structures.
Also to empower over 7, 000 entrepreneurs in the county recover from the challenges of the COVID-19 pandemic by way of affordable financing and training.
In a joint statement they stated; “Borrowers will pay single-digit interest rates, which makes this arrangement perhaps the most affordable lending program in Kenya today. The low interest rate has been made possible by the interest-sharing arrangement whereby the Laikipia government will be offering an interest subsidy of 5 percent thereby reducing the bank lending rate from 12.1 percent to 7.1 percent per annum for all borrowers”.
The bank will match three times the amount the county government will place in the Enterprise Fund to ensure borrowers benefit from the opportunity.
Co-op will also make available the full basket of services that include digital banking tools, workshops for business training and capacity-building consultancy services for co-operatives.
In this program the county government shall vet the loan applicants as provided in the fund regulations while the bank will further appraise for qualification.
‘Repayment period for the loans will be upto 12 months for SMEs and upto 18 months for co-operatives” the statement read.