We are in an environment that is changing and challenging all forms of business not just in Kenya but across the world, as an industry, we are trying to do our best to work with customers to try and help them through this crisis as best as we can according to Absa Bank Kenya Managing Director Jeremy Awori.
Awori says SMEs and MSMEs have been adversely affected by the Covid-19 pandemic, impacted on supply chains, and trade flows, as a result, introduced new measures to ease pressures around cash flow.
“We recognize this is a difficult environment for SMEs and as a sector, we have tried to help by taking the following measures…we 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.,” said Awori on Friday during the Kenyan Bankers Association ‘my chat with a CEO’ themed Supporting SMEs Affected by the COVID-19 Disruption.
“The other thing banks have done is introducing payment holidays for SMEs, as well as, restructuring loan facilities to help businesses through this crisis. So far 81.7 billion shillings worth of loans have been restructured by banks.”
Awori acknowledged that sourcing cashflow finance to free up working capital is a balancing act for businesses, “….there is no lockdown on lending, banks are ensuring they lend responsibly as we have a duty of care to the customer, not to get them over-indebted, and also to our depositors and shareholders who have entrusted us with their funds.”
“Banks have to balance being there for their customers, playing their intermediary role in the economy, and addressing the requirements of their shareholders and depositors whose money has been entrusted to us. It is critical that banks remain strong, stable, and healthy and are well-capitalized and liquid. The profitability and health of the business is essential for the sustainability of the firm beyond this crisis. And decisions have to be taken in that context,” he emphasised.
“Management on boards have to make sure they take the right decisions to ensure they manage risk while maintaining business performance.”
Besides stating that Kenya’s financial sector was well-capitalized and liquid ‘If well managed, there is no reason to think this is going to become a banking crisis’, he recommended measures to help cushion individuals and businesses.
Key among them was the deferral of certain taxes and license fees, deferral of NHIF and NSSF, payment of outstanding bills, VAT refunds to businesses, and government guarantee schemes to fund SMEs.