Last week, President Uhuru Kenyatta launched the Stawi initiative, and as expected, the internet went berserk for a moment. The Stawi initiative, for those of you who don’t know, Stawi is an initiative by banks to offer unsecured loans of between 30,000/= and 250,000/= to be paid within a year. Another aspect of Stawi that caught the attention of many Kenyans is the low-interest rate, which is set at 9% per annum.
The Stawi loans are presented to Kenyans courtesy of NIC Group plc, cooperative bank, KCB Banks, and DTB which is aimed at improving access to credit for MSME’S. MSME’s have for a long time been locked out of the formal credit market because of the informal nature of their transactions and lack of collateral for secured loans. Speaking when he unveiled the facility, the President expressed optimism that the lending service will help boost enterprise in the country by making access to credit cheaper and faster.
Small and medium-sized businesses can access Stawi loans by following a couple of straightforward steps. First, your business has to download the application. Once you’ve done that, they will ensure you have an opportunity to apply for your loan within minutes. And the best thing about the Stawi loans is they won’t be asking for any form of collateral.
This comes as a challenge for other mobile lending businesses that, for some time, have ruled over the Kenyan population. With the new player grabbing the attention of every Kenyan business proprietor, small and big alike, the others will have to come up with new, more attractive policies as well as interest rates if they are to remain competitive.
What #KOT has to say about Stawi
As usual, Kenyans on twitter has a lot to say about the new initiative as soon as it was launched. Under the #stawi, most Kenyans expressed their feelings about the latest mobile loaning platform. Here are some of the reactions by Kenyans on twitter:
“No one starts a business to lose; the financial challenges are immense, making several MSME collapse. Let’s see what #stawi has to offer!”- @SMOchieng
“I’m so proud of my #Ybizna friends who have learned how to start and operate their businesses… the @InukaSME program is free and maks a difference in teaching entrepreneurs how to be successful and access bank loans. Inuasme.co.ke #inuabiashara #inukasme #stawi
While some were waiting to see how the Stawi initiative was going to take shape, others were flat out sceptical.
“they have borrowed so much, stolen so much. No, they want you to borrow from them at 200% apr! Talk about turning dirty money into clean money? That’s that #stawi is! @odpp_ke need to investigate @cbkkenya for conflict of interest!” – @YWFkenya
“dear president soft loans zitatumaliza mtaani. Ni loan after loan… razor is that one.” – – @premium_savage
“tell #stawi@safaricomplc is already giving us the same facility at 7.5%, and there are plans to reduce further…” – @boiyotap_gaa
A final word
Of course, the launch of Stawi has managed to raise a couple of eyebrows with its heavily advertised launch. Just like it’s usually the case when a child is given a new toy. But at the end of the day, banks will always be banks. What the latter statement means is, they will still dictate the rates of payment.
Since lack of access to affordable credit is mostly credited for the estimated 90 per cent collapse of start-ups that within three years of their being operational, Stawi is expected to be a game-changer. More financial institutions are most certainly challenged to, now more than ever, innovate and come up with new approaches to supporting MSME’s instead of categorizing them as high-risk borrowers.
One of these ways is by using secure businesses such as Presta to facilitate quick mobile loans to Sacco, individuals, and MFIs so that the members could easily access funds with ease and without being viewed as a risk. Thanks to the successful launch of Stawi, we are bound to see more individual Lenders, Chamas and Table banking groups stepping up their game or risk being left behind. Unfortunately, Stawi, only deals with small to medium-sized businesses. The latter automatically shuts out individuals, who are most likely to emergencies from time to time.