Information sharing critical to SME growth in Kenya

habil-olaka.jpg

Kenya Bankers Association CEO Habil Olaka (left) and Fidelis Muia, Director of Technical Services. Photo courtesy of Kenya Bankers Association.

The cost of credit for SMEs remains high due to a number of factors, including the limited use and sharing of positive information about borrowers, inefficiencies in the collateral registration process, the cost of the judicial process, and high overhead costs.

This is according to a research by FinAccess. The project undertaken in collaboration with  FSD-Kenya, the World Bank, and the Central Bank of Kenya (CBK) was meant to seek knowledge and ways to improve understanding of the SME market on both the supply and demand sides

The move towards positive information sharing by banks should go some way towards addressing these problems, but positive information sharing from all credit providers including payment service providers and utilities companies among others, would add great value to the information already present in the credit bureaus and should be prioritized going forward, provided that data quality can be ensured, recommends the study.

The collateral registry could be made more efficient in terms of the speed and the range of items accepted as collateral, reads the report in the recommendations.

It further advises that

Resolving the legal and regulatory challenges, especially regarding the contractual environment, will require significant reforms over a period of several years.

For instance, it advances that supporting the alternative dispute resolution system established by the Kenya Bankers Association (KBA) and the Association of Kenya Credit Providers (AKCP) would be a promising approach. Such a system would ensure that the majority of disputes are mediated and resolved prior to entering the judicial system, therefore avoiding lengthy judicial procedures.

While the Government sees its role in supporting SMEs primarily as market enabling and has largely avoided direct interventions in the SME finance space, several donors are active in supporting banks through credit lines or partial credit guarantees, often coupled with technical assistance.

Given that the market for SME finance is relatively vibrant, the question is what gap donors are filling,

a potent concern the report raises.

Inevitably there is bound to be overlap in the donors’ involvement.

Closer donor coordination could therefore be quite important in ensuring that resources are allocated effectively and are market enabling, and that they do not create an uneven playing field for market players.

The challenge is also on government which could play a stronger role in keeping track of the various donor initiatives to encourage transparency and a sharing of best practices across initiatives.

13 thoughts on “Information sharing critical to SME growth in Kenya”

  1. Maximilian says:

    Hi, I do believe this is a great site. I
    stumbledupon it 😉 I will revisit once again since I saved
    as a favorite it. Money and freedom is the best way
    to change, may you be rich and continue to help others.

  2. Hi would you mind letting me know which web host you’re using?
    I’ve loaded your blog in 3 completely different web browwers
    and I must say this bkog loads a lot faster then most. Can you
    recommend a good hosting provider at a honest price?
    Kudos, I appreciate it!

  3. funny says:

    I value the article.Much thanks again. Awesome.

  4. We are a group of volunteers and opening a new scheme in our community. Your web site offered us with valuable info to work on. You’ve done a formidable job and our entire community will be thankful to you.

  5. I truly appreciate this blog post.Really thank you! Much obliged.

  6. mmf porn says:

    I really enjoy the blog article.Much thanks again. Want more.

  7. I really like and appreciate your blog post.Really thank you! Really Great.

  8. “Im thankful for the article. Really Cool.”

  9. Muchos Gracias for your blog.Thanks Again. Keep writing.

  10. Thank you ever so for you blog article.Thanks Again. Great.

  11. Kissanime says:

    “Thank you for your article post.Really thank you! Really Great.”

  12. I cannot thank you enough for the post.Really thank you! Fantastic.

Leave a Reply

Your email address will not be published. Required fields are marked *

16 − 6 =

Top