The Industrial and Commercial Development Corporation (ICDC), has reviewed its cost of loans to 3% above the CBR (Central Bank Rate), a boon to small and medium enterprises.
The Corporation said it will effectively from November 1, charge interest on loan facilities at 13% on average, which is 1% below the commercial banks’ lending rate.
The move aims to help young businesses and entrepreneurs at various stages of their business cycle to spur growth by leveraging on the medium and long term loans offered by ICDC.
The state-owned development finance institution said its Board had resolved to review the cost of loans after President Uhuru Kenyatta assented to law, the banking amendment Act 2015 that caps lending rates at a maximum of four percentage points above the CBR which is currently at 10%.
“Our rates and terms of lending have been modest in the industry. The average bank lending rates have been 18.3% before the commencement of the new law while ICDC has been lending at an average of 16%”.
“The Corporation welcomes the Government’s resolve to reduce the cost of borrowing as it is set to increase the level of investments. With the decrease in the cost of borrowing, the uptake of loans across the economy is expected to go up thereby stimulating economic growth”, said Kennedy Wanderi, ICDC Ag executive director.
ICDC currently offers a variety of financial products including joint ventures, strategic partnerships, quasi equity, corporate loans, wholesale loans, asset finance, technical advisory eervices and guarantees to its clients.
ICDC, Kenya’s pioneer development finance institution, whose mandate is to facilitate the development of industrial and commercial undertakings is committed to investing in projects with the potential to create tomorrow’s indigenous blue chip companies.
This year alone through project financing ICDC has created approximately 2,300 direct and indirect jobs in the manufacturing and agro-processing sectors.