Kenyan savings and credit cooperative societies (saccos) are fighting for a share of the World Bank’s $100 million financing programme for small businesses shattered by the economic fallout of the Covid-19 pandemic under a five-year programme seeking to safeguard the recovery of about 70 percent of the affected firms.

The World Bank’s Supporting Access to Finance and Enterprise Recovery (Safer) Fund Programme, which was approved in December 2021, has listed saccos, microfinance banks (MFBs) and mobile network operators (MNOs) as viable vehicles to reach out to the affected businesses through digital loans ranging from $70 to $1,500 in case of MNOs and $1,000 to $5,588 in case of MFBs and saccos.

The funds are being channelled through the Kenya Development Corporation (KDC), while a consultancy AVLC Group has been hired to advise the selected local financial institutions—saccos, MFBs and MNOs—on how to access this funding from the World Bank.“Our role is really to assist them (saccos, MFBs and MNOs) in understanding what the lender (World Bank) is looking for, understanding your needs, putting the structures together, then holding your hand on all the risk assessment, the processes, dealing with the regulators, if there is any challenge how do we address it until the point where you have received the funds,” AVLC Group Chief Executive Andrew Kanyutu told The EastAfrican in an interview.“We are helping these saccos to secure funding as they focus on lending. While they focus on serving their clients, we focus on tapping the funding both locally and abroad, from the World Bank institutions and some other private institutions that have the capacity to lend, because, at the end of the day, one of the biggest challenges we have had is access to funding. If you need to borrow, you have to go to a bank; we are just getting away from that trend, or the conventional way of raising funds. So we are assisting such institutions.”

The bank estimates that about two-thirds of small businesses in Kenya were affected by the Covid-19 crisis in 2020, with hopes that about 70 percent of them will resume operations based on the financial support.“The project estimates to target affected firms with a conservative estimate that 70 percent will survive the crisis based on support provided,” says the bank on its website.

About $80 million will be disbursed to businesses affected by Covid-19 by the end of the programme in December next year, with an estimated 273,456 business borrowers targeted to be financed through the programme, of which 109,382 should be women borrowers.

The programme dubbed ‘Safer’ has opened a window for saccos to strengthen their cash positions through cheaper funding away from bank loans and boost their interest income through digital loans.

About Ksh4 billion ($31 million) has been allocated to saccos for on-lending to the MSMEs through the digital platforms, of which more than seven saccos, including the Githunguri Dairy farmers Cooperative (GDC) Sacco Society, have secured over Ksh1 billion ($7.75 million) in funding in the last two weeks.

The three-year loans are procured with an interest rate of between nine and 9.5 percent, allowing the saccos to lend at about 12 percent and 13 percent and profit from the interest rate spread (difference between borrowing and lending rates).“It is a post-Covid-19 recovery fund whose intention is to assist SMEs. So we applied and we started the journey almost two years ago,” said Joseph Mburu, chairman, GDC.“It is a loan with considerable interest. It has other charges, but it is favourable. Within our sacco, we give a loan at 13 percent and 12 percent and this facility we get at nine percent. Then, at the end, as we continue with the facility, we can request a revolving fund, which is a win-win situation.”In March 2025, Kenya’s Cabinet approved a proposal by saccos to integrate into the national payment system in a move aimed at reducing over-reliance on bank loans and taking over financial products and services currently offered by banks, such as cheque books, foreign currency trading, Real Time Gross Settlement and Electronic Funds Transfers.

The amendments to the Sacco Societies Act 2008 have created provisions for implementing the Central Liquidity Facility, where saccos can lend and borrow money from one another, thereby severing ties with commercial banks whose loans are considered ‘expensive.’The MSMEs are the economic backbone in Kenya, comprising the majority (98 percent) of all the business entities in the country, generating about a third (30 percent) of job opportunities and contributing about 40 percent to the gross domestic product annually.

However, the sector remains highly informal as only 20 percent of the 7.4 million MSMEs operate as licensed entities.

This led to a shift in business dynamics and scaling down of operations to the point of temporary closure or permanent closure for non-essential enterprises.

According to the United Nations Department of Economic and Social Affairs close to half of the MSMEs (46 percent) temporarily closed their businesses for more than one year while two thirds of the women led MSMEs had closed businesses temporarily as compared to youth and men led who were below the median.

About 92 percent of the MSMEs scaled down their size of operations during the Covid-19 period and as result of this change in operations size, one third of the MSMEs (33 percent) had to release some employees to cope with the hard economic times.

Majority of the businesses released between one and three employees while the maximum number of employees released were 30.

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