Unaitas secures US$9.3m funding from Dutch PE firm Oikocredit for SME lending

KENYA – A leading progressive Sacco in Kenya Unaitas Sacco, has secured KShs1 billion (US$9.3 million) funding from Dutch private equity Oikocredit International for onward lending to small and medium enterprises. (SMEs)

The Sacco said the funds will be repaid over six years allowing them to offer loans to over 5,000 farmers’ groups and cooperatives, individual farmers, farm input dealers and transporters.

The funds are part of the Sacco and Dutch PE firm’s efforts to help firms recover from an economic fallout caused by the Covid-19 pandemic that has led to massive layoffs, pay cuts and shutdowns amid a decline in sales and customer traffic.

“As we launch the Unaitas SME Support Fund together with our partners Oikocredit, we have the conviction that the fund will propel SMEs into a recovery path and rapid growth. We commit to sustaining our business growth through member-focused service delivery,” Unaitas Board of Directors Chairman James Kinoro said.

Unaitas noted that it will factor loan risk profile of businesses before lending out to protect the investment at a time of heightened defaults rates that have soared to 14.2 percent at the end-April 2021 from 12.5 percent at the beginning of the pandemic in March 2020.

Banks, micro-lenders and saccos’ are having a difficult time balancing between new business and higher rates of default.

“Through this new loan, we are determined to drive financial inclusion in an underserved market”

Caroline Mulwa – Invetsments Manager, Oikocredit East Africa

Lenders are tapping into risk-sharing models like SME guarantee from the government and development institutions to limit their risk exposures.

Unaitas said they have had a long relationship with the Dutch firm and will rely on its history in funding small businesses shunned by other lenders.

“Unaitas has been a partner of Oikocredit since 1997 when the savings cooperative borrowed KShs40 million (US$370, 370). Through this new loan of KShs1 billion (US$9.3 million), we are determined to drive financial inclusion in an underserved market,” Oikocredit East Africa Investments Manager Caroline Mulwa said.

A research carried out by Nairobi–based Viffa Consult showed that MSMEs require Sh250,000 (US$2,314) in capital support on average to get back in shape with only eight percent needing more than Sh1 million (US$9,289).

From humble beginnings as a tea farmers’ savings and credit cooperative based in Muranga County, Unaitas has expanded to include members that are not tea growers as well as small businesses.

”Their unapologetic focus on smallholder farmers, low-income housing and small and medium enterprises, resonates with Oikocredit’s mission of providing financial access to low-income households and supporting employment generation,” Mulwa said. 

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