IDB Capital keen to promote SMEs in Kenya
A chat with Mrs Karen Kandie, Managing Director, IDB Capital Limited (IDB), at her office in National bank building (18th floor) along Harambee Avenue, points to incredible efforts the Government of Kenya is doing to promote SMEs in Kenya. Investors who want to establish, expand and modernise their small, medium and large enterprises, can now turn to IDB for funding. IDB Managing Director Mrs Karen Kandie says industrial investors who need plant, machinery and equipment can now tap into a Sh1.5 billion line of credit the institution is rolling out. This line of credit was secured by the Government of Kenya from the Government of India, to stimulate Kenya’s industrial development. The facility, provided under a trade partnership agreement between the two countries, will enable small, medium and large industrial enterprises to access credit at competitive terms to purchase plant, machinery and equipment from India. Mrs Kandie said the credit line will boost the implementation of President Uhuru Kenyatta’s ‘Big Four’ agenda and lead to job creation. To support this, IDB is keen to promote manufacturing, health, textile, education and agro- processing sectors of the economy in line with governments agenda.The MD, however, points out that the institution has many lines of credit that it can pursue, including partnering with development finance institutions such as the African Development Bank therefore, investors should not hold back since IDB has more than Ksh 1.5b to lend.“The minimum amount we lend is Sh5m and the maximum, Sh200m but all is not cast in stone,” Mrs. Kandie says. “The amount can be revised depending on an enterprise’s need.” She adds: “IDB is a government policy tool that, through development finance, helps de-risk sectors so that other financiers can venture there.”Mrs Kandie says IDB has, in more than 45 years, supported many enterprises that became major brands. These enterprises cut across all sectors with names such as Bidco and Chandaria Group foremost among them.“As a government agency, IDB is well-placed to take risks that commercial banks and other financiers may be unwilling to accept,” she explains. “The role of government is to clear risks to enable banks to come in and start financing the enterprises.” She adds: “As a development finance institution, IDB has three value propositions which favour investors.”To begin with, the DFI is able to lend at a longer tenor, usually for five to ten years, that is why the Managing Director describes the credit they give as ‘patient capital’. In addition to that, IDB gives investors a grace period on repaying the principal and as Mrs. Kandie explains, “this is enough time for the investors to establish their businesses, produce goods and services, and market them.” Lastly, IDB is willing to take a higher risk than a commercial bank would.“Enterprises provide the goods and services. We at IDB, as their partners, provide the development finance,” Mrs Kandie says.Among other products offered by IDB include project finance, a facility that is suitable for industrial and commercial enterprises in need of capital to establish, expand or diversify their businesses.IDB also provides asset or equipment finance to corporate clients who seek to acquire, modernise or increase their machinery, plant and equipment. Working capital is another facility that is available to enterprises, to help them finance their working capital requirements such as purchase of raw materials and to enable them manage their cash flow more efficiently.IDB Capital Limited therefore invites investors to apply for financing that would help grow their enterprises at very competitive terms.