Lack of funding stalling SMEs contribution to sustainable goals

SMEs are notably crucial drivers in the economy with a contribution of about three per cent of the country’s GDP.

• The sector if further projected to contribute up to 50% of the country’s GDP in the next three years.

• Sector players from Small and Medium-sized enterprises are calling on lenders to stop sidelining them when loaning stakeholders in a green transition drive pointing towards sustainability.

  Speaking during During Diamond Trust Banks’ inaugural economic and sustainability forum on Wednesday, they noted the SME sector lacks adequate access to green funding despite huge sums of funding coming from international donors.

• “The banks have been assuming us on the basis of having inappropriate structures to meet funding requirements, instead of focusing on our capability as a sector towards sustainable production,” said Ciiru Waithaka, Anjiru CEO and a sustainable manufacturer.

• She added that they as a sector, have also been sidelined on the basis of improper tracking of business activities and having small loaning ticket sizes.

  The managing partner and ESG lead, Protos Capital, Loise Musyoka also noted that SMEs are grappling with low awareness of ESG issues, giving lenders more reasons to sideline them in green funding.

  

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  “The lenders now need to incorporate grants for learning to educate these enterprises on sustainability to make them more eligible for funding,” Musyoka said.

  SMEs are notably crucial drivers in the economy with a contribution of about three per cent of the country’s GDP.

  The sector is further projected to contribute up to 50 per cent of the country’s GDP in the next three years.

• The players are thus urging the lenders to come up with mechanisms that would aggregate funding to the enterprises to back their efforts toward Environmental, Social and Governance (ESG) strategies.

  Amidst the forum, the lender announced its commitment to sustainability drive with a plan to grow its green lending portfolio to about 25 per cent and achieve net zero carbon neutrality by 2030. 

• It also plans to source at least 50 per cent of its procurement needs from green vendors within its supply chain portfolio by 2030.