At the height of the interest capping debate in 2016, there was a directive from the Central Bank of Kenya that banks should allocate at least 20% of their finances to growing small businesses, or precisely SME lending. The directive came about after it was discovered that banks were not lending to small businesses since they deemed them risky borrowers. Of course, banks were furious with the law that placed the maximum lending rate at 4%. Before the capping, banks could lend at a rate as high as 18% which meant loans were only accessible to blue chip companies. Small businesses were at the mercy of SACCOs and digital lending apps who had minimal requirements but again exploited the customers. After a year of the interest capping law, it was finally repealed after it yielded unwanted results and with the banks promising to self-regulate themselves even though CBK warned them that it would not hesitate to reinstate the law should the banks go overboard. 

With that, came the rise of many financial products and facilities to small businesses after numerous studies underscored the fact that 60% of Kenya’s economy was supported by small and medium enterprises. Banks were at a race to attract various demographics that were hitherto ignored. The packages came in different forms such as strategic partnerships with international bodies that are involved in a certain line of business such as farming. Some banks introduced products that were meant to transform small businesses from a small one man show to blue chip levels with women at the helm. This was to be achieved through extending credit facilities, mentorship and networking. 

Despite this, support of businesses owned by people with disabilities has largely remained in the periphery seen through CSR lenses. Financial institutions have been dragging their feet when it comes to empowering businesses owned by Persons with disabilities. For instance, most financial institutions have been proponents of the Access to Government Procurement Opportunities (AGPO) when it comes to businesses for Persons  with disabilities, with training and LPO financing. While AGPO is a good empowerment tool, it's riddled with the challenge of delayed payments which weaken the purpose for which it was meant for. Secondly, most banks support cottage industries with low levels of technology when it comes to businesses owned by people with disabilities, in form of grants and with no follow up training for the business to grow. 

From 2019, the global business community shifted their prime focus from just profits to a more inclusive and broader outlook of defining success in business. In came Environmental Social Governance (ESG) Initiatives. ESG investing is when a company chooses to concentrate their efforts in environmental social or corporate governance issues. Disability falls under the social category more so disability inclusion. Supporting businesses owned by people with disabilities would be supporting an ecosystem that benefits even those without disabilities. To begin with, there will be uptake of insurance to take care of medical related expenses instead of using business capital to take care of disability related medical expenses. After all, banks have begun selling banking products intertwined with insurance as a way of having a unique selling point. In addition to this there will be skill and technology transfer depending on the business/industry in question. The ripple effect is that there is creation of adequate labor that can be absorbed in other organizations that are involved in the same line of business. For example, if a small business is involved in the supply of goods such as fast-moving consumer goods (FMCG) and the business is supported to grow to blue chip levels, the PWD working in that business will have an easier time moving to a bigger company in the same sector in the same capacity thus saving the bigger company time for retraining the PWD to fit in that business environment. The PWD could also decide to broaden their focus in the supply chain sector and move into logistics which is more lucrative. To get to such levels, the business must be having a strong relationship with the banking sector for finances, mentorship and networking which is a healthy symbiotic relationship.

The banking regulator has largely been seen as an inactive player in matters of disability and economic inclusion. In the case of banks supporting businesses owned by PWDs, the CBK would come in to follow up on the commitments made. ESGs have ushered a new way of doing things but there is skepticism among players about greenwashing where companies promise on things and do the opposite behind the scenes. Regulators in developed countries seem to be stepping up to prevent a situation of investors being duped to believe something nonexistent. CBK would be the best suited regulator to monitor the environment in our country as far as banks supporting PWD businesses as an ESG is concerned. In case of ESG ratings, the ratings would be accurate coming from the regulator itself. In addition to creating more jobs for PWDs as well as the non PWDs, such a scenario would broaden inclusion from just an event to a process and a culture deeply ingrained in our society.

By

Brian Murithi Ndiritu