The government has suspended disbursement of business loans to small-scale traders across the country due to a high rate of non-payment on the facility.This according to the Nyamira County trade director, who says the national government has stopped lending to businessmen in the area after 182 of them failed to pay back a total of Sh4.1 million.
“The national government has suspended disbursing loans to traders across the country after many business people failed to pay back money loaned to them. In the meantime, we have engaged loan debt collectors to follow the defaulter,” area trade director Charles Ntabo Kerongo said Wednesday.“The loan was a revolving fund and was supposed to be repaid within two years to benefit other applicants,” he said.The move will hurt micro-traders who cannot afford to get loans from financial institutions such as commercial banks.“Currently, we have 200 applicants who want to get the loan from the kitty but who are unable to benefit because its disbursement was stopped,” Mr Kerongo said.He said beneficiaries who defaulted had used the loans for different purposes like paying school fees for their children instead of channelling the funds to their businesses.Others used the cash to buy motorbikes which they operated as bodaboda but did not get good returns to enable them repay their debt.Despite the challenges, he said there are a number of success stories of small scale traders who used the loans to expand their businesses from retail to wholesale enterprises.