Category Archives: Youth Funding

Barclays Kenya expands Enterprise Supply Development (ESD) programme

Barclays Kenya has announced an expansion of the support initiatives and resources available to small and medium enterprises (SME’s) through their Enterprise Supply Development (ESD) programme in Nairobi today.

Karen Kiambi, the Head of ESD Programme, said that while banks in the Barclays Africa group are all rebranding to Absa by 2020, Barclays Kenya was well on that path and it was using the rebrand to launch products like Timiza. She added that it had been the first Absa member, out of South Africa, to launch the ESD programme for SME’s.

She said SME’s were vital to the economic growth of countries and yet they continued to face challenges access financing especially in low-income countries, but that in the early phase of the ESD programme, Barclays had managed to avail unsecured financing to SME’s who supply goods and services to corporates such as Allpack, EABL, Kenya Wine Agencies, Unilever, Nairobi Hospital, and Gertrude’s Hospital. She said they now aimed to add more resources and reduce the processing time for financing requests by having an online web page for loan applications.

James Agin, the Barclays Director for Corporate Banking, said the ESD had three principles of easy access to finance, enterprise development and access to markets. Besides training in the ESD entrepreneurs, can also join the Barclays Business Club and from next year, the SME’s with high scores will have a higher profile to market themselves to other corporations. The event featured Barclays staff and guests including Peter Mungai (Head of Tax at Barclays), David Logongo (Procurement Manager, Kenya Revenue Authority) and Francis Murabula (Head of Supply Chain Management, Safaricom).

A statement released after the event indicated that SME’s seeking LPO financing and invoice-discounting through the programme would only need to have six months of bank account history and a supply contract, and that there would be no requirement to provide audited accounts.

CBK Fines Banks over NYS Transactions 

The Central Bank of Kenya (CBK) has levied bank fines against five institutions over transactions relating to their handling of payments and movement of funds sent from the scandal-plagued National Youth Service (NYS).

The banks are Diamond Trust which handled Kshs 162 million, and was fined Kshs 56 million, Co-operative Bank which handled 263 million (and was fined 20 million), KCB which handled Kshs 639 million (fined 149.5 million), Equity moves Kshs 886 million (89.5 million fine) and Standard Chartered which handled Kshs 1.63 billion from the NYS, and which was fined Kshs 77.5 million.

The CBK statement read that the bank fines followed investigations into failures at the banks including; not reporting large cash transactions, not doing due diligence on customers, lack of support documents for large transactions and lapses in reporting suspicious financial transactions to the Financial Reporting Centre (FRC).

Notably missing was Family Bank that featured heavily in a prominent series of transactions of funds that originated from procurements at the NYS. It has been previously sanctioned and branch and senior staff are being prosecuted.

All the banks which handled NYS funds had been named earlier and the CBK statement added that this was not the end, with an additional group of banks set to be identified and investigated.

FSD Kenya Insights on Youth and Agri Finance

FSD Kenya, which aims to create value through financial inclusion, have just released their 2017 Annual Report which contains findings from ongoing research projects around Kenya.  

Some excerpts 

  • The unregulated digital credit space in Kenya, mainly phone loans, has overtaken other forms of credit in the country with 19% paying digital loans, much more than 17% repaying family/friends or 14% paying shopkeepers for goods taken on credit. 
  • 45% of borrowers through mobile phones are now female. Usage has shifted from day-to-day to investing in businesses, but 14% are (900,000 individual) are juggling multiple loans, and half have defaulted or delayed loan repayment.
  • Tweaking Agri-Finance: There is lack of access of credit to agriculture which receives just 4% of banking credit. This could be partly due to lack of data so they are partnering with M-Kopa Labs to research other models. Hall of M-Kopa customers make money from agriculture and buy solar products so the research aims to see of if the pay-as-you-go model can be applied to other products like farm inputs, water tanks, fertilizer, animal feed etc.
  • Youth Finance products: 40% of the population is under 15 years but youth are underserved by the banking sector. They see money as a means of survival and savings as being for buying something not long-term or unanticipated needs. There is a lack of appropriate financial products for the youth, and this could be because older adults are the ones developing financial solution for the youth. One outcome of this research, funded by Funded by SIDA and the Bill and Melinda Gates Foundation could be a new class of lending to the youth, a development by FSD Kenya and the Kenya Bankers Association. 

  • They are also involved in the Kenya Hunger Safety Net program in which the government transfers Kshs 20 billion ($200 million) a year to people over 70 years.
  • Visiting economist John Kay gave a lecture where he advised that Kenya should develop local financial solution and not adopt western financial models.
  • Smartphone uptake still low, but USSD is how Kenyans can access robust banking services with cheap handsets.

Entrepreneurs get support from UBA Foundation and Kenya’s Youth Fund

The UBA Foundation and the Youth Enterprise Development Fund in Kenya have signed a partnership to support Kenyan entrepreneurs who participate in the fourth cycle of the Tony Elumelu Foundation entrepreneurship development program.

The UBA Foundation is the CSR arm of the UBA Group, a pan-African bank that is in 19 countries. It focuses on economic empowerment, education, and the environment, while the Tony Elumelu Entrepreneurship program is a flagship of the Tony Elumelu Foundation (TEF) . The program is an investment of $100 million that aims to nurture 10,000 African startups to create 1 million jobs and generate $10 billion in revenue growth over ten years. This will be through funding, training, mentorship, counseling and networking for the startups to trade across Africa and beyond.

Entrepreneurs apply to the TEF and Youth Fund.

The CEO of the Youth Fund Josiah Moriasi said the organization had advanced Kshs 12.2 billion to 1.4 million Kenyans through their core products such as LPO financing, talanta loans (for creatives), and startup loans. Ronald Osumba, Chairman of the Youth Fund, said that while the Fund had been in the news for some wrong reasons, it had also supported many young successful people,  not just with finance, but also business support, market linkages, and business spaces.  They were also working to reduce the failure rate of startups through market aggregation models in counties around the country.

This year the TEF program is already seeing a record number of entries from 54 countries since the window for applications opened on January 1.   It runs up to March 1, 2018, for applicants to submit their startups or business ideas and the selected entrepreneurs  will participate in the 2018 cycle that runs from May 1 to December 2018. 

The Tony Elumelu Foundation program has 3,000 alumni now, and over 200 Kenyans have benefited from the program, each having received $5,000 (~Kshs 500,000) as seed capital for their businesses which they have then used to scale and grow into other product and service lines. This year, UBA Kenya officials hope to enroll more Kenyan in the program as the country has run a distant second to Nigeria in past applications and enrollment.

The application process is rigorous but it pays off. TEF entrepreneurs get twelve weeks of training, mentorship, $5,000 of seed capital and access to the alumni network and further funding opportunities.  Kenyan entrepreneurs who complete the application to the TEF site can also apply to the Youth Fund for another $5,000 in matched funding.

Kenya Government DFI merger plan

This week came a report of circular regarding the merger of several government banks and development finance institutions (DFI’s). The institutions targeted to form the mega-development bank include the Kenya Industrial Estates, Uwezo Fund, Youth Enterprise Development Fund, Women Enterprise Development Fund, Development Bank of Kenya and Industrial Development Bank of Kenya.

Earlier, a Report of The Presidential Taskforce on Parastatal Reforms that was presented to President Kenyatta in October 2013 had proposed merging Kenya Industrial Estates, IDB Capital, Industrial and Commercial Development Corporation, and the Agricultural Finance Corporation. The rationale was that they were all fragmented, sector-specific, ineffective DFI’s with overlapping mandates that should be merged into a Kenya Development Bank (KDB). The committee also proposed the creation of a new Kenya Export-Import Bank (Kenya EXIMBANK) to promote Kenya’s exports through the provision of export and import finance and related supporting activities.

This is not new, but a variation of an older plan to merger government-owned, or controlled, banks. It now excludes two banks that may or not be in talks – KCB has been linked to a move to acquire National Bank. It also leaves out Consolidated Bank, the Kenya Tourism Development Corporation, and the Agricultural Financial Corporation, but now includes new government entities that have been created to advance funding to special groups like industrial entrepreneurs, women and youth entrepreneurs.

But speaking at an event launching a partnership between the Youth Enterprise Development Fund and the UBA Kenya Foundation, YEDF Chairman, Ronnie Osumba,  said that the pending DFI merger would take into consideration the continuity of all ongoing affirmative action fund programs.

EDIT May 15, 2018

 

At the second cabinet meeting for 2018, chaired by President Uhuru Kenyatta, the Cabinet:

  • Approved the merger of the  Industrial and Commercial Development Corporation (ICDC), IDB Capital and the Tourism Finance Corporation to create the Kenya Development Bank, a single cross-sector development finance institution with sufficient scale, scope, and resources to play a catalytic role in Kenya’s economic development.
  • Approved the proposed Public Finance Management (Biashara Kenya Fund) Regulations, 2018 to guide the operations of the proposed Biashara Kenya Fund which will be established after the proposed merger of Uwezo Fund, Youth Enterprise Development Fund, Women Enterprise Development Fund and Micro and Small Enterprise Authority (MSEA).
  • Approved the proposed Public Finance Management (Tourism Promotion Fund) Regulations, 2018 to guide the operations of the proposed Tourism Promotion Fund.