{"id":52142,"date":"2023-12-14T21:18:56","date_gmt":"2023-12-14T21:18:56","guid":{"rendered":"https:\/\/www.africa-press.net\/mozambique\/all-news\/how-microcredits-have-revolutionised-business-financing-in-kenya"},"modified":"2023-12-14T21:57:30","modified_gmt":"2023-12-14T21:57:30","slug":"how-microcredits-have-revolutionised-business-financing-in-kenya","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/mozambique\/all-news\/how-microcredits-have-revolutionised-business-financing-in-kenya","title":{"rendered":"How microcredits have revolutionised business financing in Kenya"},"content":{"rendered":"

Africa-Press – Mozambique. <\/strong><\/span>The economic philosophy of the microcredit system was developed by a Bangladeshi economist Muhammad Yunus whose \u201cmicrocredit\u201d idea revolved around the extension of loans to impoverished unbanked borrowers, to allow them to become self-sufficient.<\/p>\n

Since the year 2000, microfinance in Africa has become a lifeline for low-income earners, who are largely in the informal sector.<\/p>\n

Despite its strategic role, the informal sector, largely characterized by Micro, Small and Medium Enterprises(MSMEs) has faced a lack of access to trade capital and growth financing. MSMEs in Kenya have experienced challenges accessing finance amidst unfavorable business and regulatory environments.<\/p>\n

In addition, these enterprises also face internal constraints related to talent gaps, lack of entrepreneurial skills and weak managerial capacities.<\/p>\n

These constraints usually manifest in a concentration of MSMEs in activities that require low resources, in terms of capital, skills and financing.<\/p>\n

According to the International Monetary Fund (IMF), low-income people and MSMEs are unattractive to the mainstream financial systems because they are considered uneconomical to serve or too difficult to reach.<\/p>\n

Lack of access to financial tools, therefore, prevents these vulnerable groups from being able to progress financially and improve their economic standing.<\/p>\n

A report by Kenya National Beaurea of Statistics (KNBS) indicates that the overall credit advanced by commercial banks and non-banking Micro financial institutions at the end of December 2022 increased by 12.3 per cent to Sh6.218.2 trillion, largely driven by credit advanced to the MSMEs.<\/p>\n

Nonbanking Microlenders offering installment payment terms and hire purchases for instance, have enabled the majority of the underbanked customers especially the youth, women and persons with disabilities acquire a broad range of products and services ranging from solar lanterns, solar home systems and solar inverters, motorbikes, tuk-tuks, mobile phones, cars and other business assets at friendly terms without demanding collateral as has been the tradition.<\/p>\n

These facilities have helped increase the access to credit by low earners in our society by allowing them instant access to products while building ownership over time through flexible micro-payments.<\/p>\n

These firms have optimized payments and settlement of securities and back-office functions by reducing costs and enabling direct business-to-business (B2B) transactions, bypassing conventional intermediaries.<\/p>\n

Non-banking microfinancing firms have replaced many conventional financial services offered by the banking and financial sectors, such as retail banking, foreign exchange, wealth management, investment advice, stockbroking, spread-betting, corporate banking and lending, and loan brokerage.<\/p>\n

Through digital lending, these firms have enabled youth and women-led MSMEs to grow and compete even in the most turbulent business environment as seen currently during this economic depression and even during the Covid-19 Pandemic.<\/p>\n

They have also played a big role in the growth of human capital by making the labor force to be more productive.<\/p>\n

According to the World Bank, financial inclusion is one of the critical drivers of poverty reduction and economic growth in emerging markets and developing economies as identified by the G20.<\/p>\n

Studies indicate that a lack of adequate government support is hindering the development of the MSME sector in the country.<\/p>\n

There is a need for the state to create an enabling environment, including playing an active role in the development of a vibrant MSME loan market.<\/p>\n

Otieno Panya is a Lecturer and Supply Chain Management Consultant<\/p>\n

Jomo Kenyatta University of Agriculture and Technology (JKUAT)<\/p>\n

Source: The Star<\/b><\/p>\n

For More News And Analysis About Mozambique<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Mozambique. The economic philosophy of the microcredit system was developed by a Bangladeshi economist Muhammad Yunus whose \u201cmicrocredit\u201d idea revolved around the extension of loans to impoverished unbanked borrowers, to allow them to become self-sufficient. Since the year 2000, microfinance in Africa has become a lifeline for low-income earners, who are largely in […]<\/p>\n","protected":false},"author":84,"featured_media":52141,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,6],"tags":[233,281,283],"class_list":["post-52142","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-files","tag-africa-press","tag-africa-press-mozambique","tag-mozambique"],"yoast_head":"\nHow microcredits have revolutionised business financing in Kenya - Mozambique<\/title>\n<meta name=\"description\" content=\"The economic philosophy of the microcredit system was developed by a Bangladeshi economist Muhammad Yunus whose \u201cmicrocr ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/mozambique\/all-news\/how-microcredits-have-revolutionised-business-financing-in-kenya\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How microcredits have revolutionised business financing in Kenya\" \/>\n<meta property=\"og:description\" content=\"The economic philosophy of the microcredit system was developed by a Bangladeshi economist Muhammad Yunus whose \u201cmicrocr ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/mozambique\/all-news\/how-microcredits-have-revolutionised-business-financing-in-kenya\" \/>\n<meta property=\"og:site_name\" content=\"Mozambique\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2023-12-14T21:18:56+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-12-14T21:57:30+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/mozambique\/sites\/64\/2023\/12\/sm_1702578206.832447.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1000\" \/>\n\t<meta property=\"og:image:height\" content=\"596\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/mozambique\/all-news\/how-microcredits-have-revolutionised-business-financing-in-kenya#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/mozambique\/all-news\/how-microcredits-have-revolutionised-business-financing-in-kenya\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/mozambique\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"How microcredits have revolutionised business financing in Kenya\",\"datePublished\":\"2023-12-14T21:18:56+00:00\",\"dateModified\":\"2023-12-14T21:57:30+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/mozambique\/all-news\/how-microcredits-have-revolutionised-business-financing-in-kenya\"},\"wordCount\":562,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/mozambique\/all-news\/how-microcredits-have-revolutionised-business-financing-in-kenya#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/mozambique\/sites\/64\/2023\/12\/sm_1702578206.832447.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-Mozambique\",\"Mozambique\"],\"articleSection\":[\"all news\",\"files\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/mozambique\/all-news\/how-microcredits-have-revolutionised-business-financing-in-kenya#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/mozambique\/all-news\/how-microcredits-have-revolutionised-business-financing-in-kenya\",\"url\":\"https:\/\/www.africa-press.net\/mozambique\/all-news\/how-microcredits-have-revolutionised-business-financing-in-kenya\",\"name\":\"How microcredits have revolutionised business financing in Kenya - 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