Suppliers cautious of credit amid new CRB suspension

  by Jacktone Lawi

Small and Medium Enterprises in the country are reeling from tough times despite a directive meant to cushion them for 12 months from financial distress.

This after President Uhuru Kenyatta ordered in his Mashujaa Day celebrations speech that borrowers with less than Sh5 million will not have their records incorporated in their credit reports for the next One year.

CBK governor Patrick Njoroge clarified that the suspension will apply for borrowers whose loans were previously performing, but have become non-performing from October 1, 2021.

The directive was supposed to support small and medium enterprises  rebound from the effects of the pandemic but now seems like a two edged sword.

With Central Bank of Kenya (CBK) effecting the directive to suspend CRB listing, the lender of last resort warned Monday that financial institutions may shun lending to individuals and small traders targeted in this relief.

“The suspension could adversely impact the provision of credit by banks to the target (MSMEs) group as they will be unable to distinguish between the good and bad borrowers during the suspension period,” a statement by CBK read.

It is also emerging that some suppliers are now getting skeptical , saying CRB was one of their tools to ensure they get paid.

“We are used to give part of the suppliers goods on credit knowing that with CRB they can be compelled to pay to avoid listing, now that is not possible, I demand for upfront payments,” says Emily Maina, an importer of second hand clothes at Gikomba market.

Reference bureau

Chrispine Asin founder of Lawisons Engineering based in Tassia, Embakasi, the directive is yet to have an impact on his business since he’s personally blacklisted with the reference bureau and not his business.

“I supplied to two people who are yet to pay me though my firm mostly works on credit. Currently I don’t have a huge number of Clients so any delay in the payment is really harming my business,” said Asin.

He however expresses hope that the government can sort out ways to enable businesses access loans even if the proprietor is listed. “The move has not helped me, unless they de list me as an individual it’s not going to help,” he says.

Hussein Ali who is an imports cars and sells them on credit says the new move will make things tricky for him. “I rely on CRB a lot and people are afraid to get listed. Now this makes my business tricky,” Ali said.

Miller Indagiza who runs a furniture business along Outering Road says times have been tough for him struggling with non-payments. “I have people who haven’t paid me they are majorly government parastatals top in the list.”

Chrispine Asin founder of Lawisons Engineering based in Tassia, Embakasi, the directive is yet to have an impact on his business since he’s personally blacklisted with the reference bureau and not his business.

“I supplied to people who are yet to pay me though my firm mostly works on credit. Currently, I don’t have a huge number of clients so any delay in the payment is really harming my business,” said Asin.

Currently more than 14 million loan accounts have been negatively listed with CRBs as per data that was released in January.

Lenders such as banks, saccos and microfinance firms share data with CRBs which help such SMEs access loans even without collateral.

Currently more than 14 million loan accounts have been negatively listed with CRBs as per data that was released in January.