Kenyan youth, women, disabled persons and small enterprises are set to start getting government loans at 6 per cent interest under the Biashara Kenya Fund.
The cheap loans follow a decision by the government to consolidate existing youth and women funds into one fund dubbed Biashara Kenya Fund.
“The interest payable on a loan advanced to the persons referred to in regulation 13 shall be at the rate of six per cent per annum on a monthly reducing balance,” read in part the draft regulations that were released yesterday by National Treasury Cabinet Secretary Henry Rotich.
Commercial banks are currently lending at a minimum 13.5 per cent, way above the proposed new rate.
The fund will start with an initial capital of Sh. 2 billion to be allocated by Parliament.
Creation of the new fund means that the Youth Enterprise Development Fund and Women Enterprise Fund might be wound up.
Money borrowed from Biashara Kenya Fund will be used for business only, with applicants expected to prove that they have established businesses.
The Biashara Kenya Fund will also lend some of the money to intermediaries such as commercial banks, who will, in turn, lend to these special groups at a maximum rate of 10 per cent.
Not more than 25 per cent of the fund’s cash will be lent to intermediaries.
“The interest payable on a loan on-lent by a financial intermediary to women, youth, persons with disability, enterprises and micro, small and medium enterprises shall be at a maximum rate of 10 per cent per annum on a monthly reducing balance,” indicated the draft regulations.