Co-operative Bank of Kenya has made a significant move to reduce the interest rates charged on personal loans and asset finance to selected key borrowers from 14 per cent per annum to 13 per cent per annum with effect from April this year.
Among the main beneficiaries of the new lower rates include key corporate and institutional employers including the Kenya Defence Forces (KDF) and other armed services, the Kenya Police Service, the Teachers Service Commission (TSC), Government ministries, the National Assembly, key state corporations such as Kenya Revenue Authority (KRA), KenGen among others.
This ‘contrarian approach’ bucks the industry’s trend where many lenders are revising lending rates upwards, especially in light of the recent upward adjustment of Central Bank Regulation (CBR) by a huge 75 basis points to 9.5 per cent.
Co-op Bank’s reduction of the lending rate is the bank’s response to the good loan repayment record and reduced default risk that the target check-off scheme loans have recorded over time.
It is also a deserved reward for customers who have consistently maintained a good credit record.
Customers have been informed directly by way of a text message: “Dear Customer, You can now top-up your existing personal loan at a rate of 13% p.a instead of 14% p.a. Please apply at any Co-op Bank Branch.”
The new offer has elicited palpable excitement as it offers a huge relief to Kenyans who are grappling with a cash crunch and ‘every shilling counts’.
Co-op Bank retains a credit pricing model that is dynamic and attuned to respond effectively to credit performance.
In this regard, the bank is working to extend this benefit beyond the current target customer segments namely Personal Loans and Asset Finance, to include all borrowers with good credit history.
In other news, the Cooperative Bank Foundation in partnership with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH is working on the Jenga Rider programme, which is part of Employment and skills for Development in Africa (E4D) programme aimed at improving the employment and economic situation among 2,400 boda-boda riders in the Coastal, Central and Eastern regions of Kenya.
E4D aims to connect people to jobs and improve employment situations in Kenya.
Similar to other middle-income countries, youth unemployment in Kenya presents a challenge to its development agenda. The World Bank estimates that approximately 800,000 Kenyans join the labour market each year and only 50,000 succeed in getting professional jobs.
International Labour Law (ILO) corroborates this situation where youth aged 15 to 24 make up over 35 per cent of the working-age population and account for less than 19 per cent of total formal employment.
Given the current population trends, the overall number of unemployed youth will double between 2010-2035, hence the move by E4D to step in.
Through the Jenga Rider programme, Co-op Bank Foundation has so far supported over 2,400 riders drawn from 85 groups in Coastal, Central and Eastern regions.
The riders have undergone training on entrepreneurship and financial skills to promote business growth and stability.
The training sessions are integrated with digital skills to promote utilization of digital solutions for ease of access to up-to-date information by riders and foster compliance to road safety and legal regulations.
The programme targets to support 1,000 riders to get riding licences. 500riders are currently attending riding school classes in the project regions.
Based on their organization, the foundation has supported registration of 14cooperatives in Nairobi and conducted training for 42 cooperative leaders on management of cooperative as well as exposed them to the existing opportunities within the sector.
Similar trainings are scheduled for Eastern and Coast regions.
Partner institutions include; National Transport and Safety Authority (NTSA), SAFAL MRM Foundation, Co-op Bank Bancassurance and Mark Holdings Limited.
By Rosemil Oduor
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