As the COVID19 dust settles down, the real impact on SMEs in Kenya is becoming evident with massive layoffs across the board and business closure. On Friday’s #CEOChat online forum, Jeremy Awori, Absa Kenya CEO, expounded on ways that the banking sector is supporting SMEs affected by the COVID19 disruption. My Chat with a Bank CEO is a forum by Kenya Bankers Association where Bank CEOs engage social media users on topical issues.
Mr Awori commences by stating that COVID19 is challenging all forms of business across the region and the world. In particular, there has been a disruption of supply chains and trade flows. Lock-down measures have affected firms in day-to-day operations. He reiterated the lenders’ commitment to bringing and improving banking services for SMEs, entrepreneurs, startup or established for many years.
One way banks are helping SMEs is that banks have already restructured billions worth of loans in addition to introducing payment holidays for SMEs. For instance, in the hospitality industry, Awori says lenders have restructured the facilities for when they reopen. Based on initial assessments of application from customers, there is an expectation of a surge in customers seeking loan rescheduling.
Further, banks have waived fees to transfer money from bank accounts to mobile wallets; this is important because it makes it easier for online transactions to happen and removes costs for the customer, it also aligns with the COVID hygiene requirements.
Banks are supporting businesses that are producing goods and services that are related to COVID such as manufacturing of masks, sanitizers and other health products. Awori also opines that banks will still assess SMEs applications on a case by case basis thus encourages business owners to talk to their banks.
Banks are doing everything they can to manage their costs and in particular, the non-staff costs to ensure that staff remain employed. In addition, banks are coming up with new business models to allow employees to work remotely, from home, and other locations to continue offering services to our customers through this pandemic and beyond.
Awori has urged the government to take actions that will help the cash flow of individuals and businesses. Additional measures that could be considered could include deferral of certain taxes and license fees (both at the county and national level); deferral of NHIF and NSSF; payment of outstanding bills at the county and national level; and VAT refunds to businesses to alleviate the cashflow challenge. Banks can also work with the government and other partners on risk-sharing and guarantee schemes to fund SMEs.