SME Trade Finance: Review of facilities available in - FSD Kenya

30 • SME TRADE FINANCE – REVIEW OF FACILITIES AVAILABLE IN KENYA
Lead
Institution
The Bankers
Association
& the Banks
The Central Bank
of Kenya
NGOs involved in
the improvement
of the financial
environment
for SME trade
Finance, such as
the Kenya Gatsby
Trust Foundation.
The SME
Associations
Proposed action Objective
Review and analyse the reasons behind the large
amount of cash cross-border trade operations. Identify
actions to encourage traders to use safer channels.
Review the evolution of the banks’ trade finance
operations by economic sector and by export market.
This will help identify the trends and characteristics
of these operations, and help the banks to meet the
evolving requirements.
The banks should segment their SME clientele into
homogenous categories whenever possible. They could
assign different teams to service the various segments,
to avoid the smaller companies in larger segments not
being serviced adequately.
Commission sector studies in cooperation with the
various Business Associations, Credit Reference Bureaus
and the Export Promotion Council. These studies would:
1) assess the financial characteristics of SMEs in the
various sectors, and 2) analyse their trade finance
requirements and their performance on a historical
basis.
Organise and publish the segmentation of Non-
Performing Loans statistics on a clientele basis, by
Corporate/SMEs/sectors as well as by type of credit risk
involved. This will draw the banks’ attention towards the
relative risks of various types of commitments, including
trade finance instruments.
Annual awards should be granted to the best trade
finance banking institutions in Kenya. This will draw
the attention of the banking sector to these important
financing instruments. Similarly, an award for the most
cost effective bank in Kenya, as far as trade finance is
concerned, would draw attention to the cost of bank
services.
The various Associations organising business trips
for their members should invite the participation of
bankers. Eventually banks’ sponsorship of the trips
should be encouraged. This would facilitate networking
between the banks and the participants, as well as
provide opportunities for trade finance support to the
participants.
Facilitate payment security and the movement of
goods, and promote official transactions. These will
contribute to the development of the formal sector.
Facilitate the banks’ appreciation of the trade
finance requirements and trends in the market. This
will focus attention on the trade finance needs of
the SMEs.
Facilitate the design of specific banking products
in line with the requirements of each segment of
the clientele. Provide the adequate manpower and
expertise.
Facilitate transparency of SME performance in the
various sectors involved with international trade.
This would allow for improved credit facilities
Draw the banks’ attention towards the risk
weighting of the various sectors and financial
instruments, including trade finance services.
Draw the attention and awareness of SMEs to the
best banks for the provision of trade finance services
on a cost effective basis.
Facilitate contacts between SMEs active in
international trade active and interested banks.
Meanwhile, provide on the spot support for
the potential deals being negotiated by the
participants.
Importance/
urgency 24
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Feasibility and
financial cost 25
24 On a scale from * to *****, the most favourable, cheapest and easiest to implement being *****.
25 On a scale from * to *****, the most favourable, cheapest and easiest to implement being *****.