Importance of credit facilities in business continuity
This article brought out the state of the Kenyan economy, at least according to IMF. This is despite the financial challenges that continue to face small and medium enterprises commonly referred to as SMEs. It currently is costly to build, maintain and grow a small or medium business in the country especially in the areas of eventualities that are majorly covered by insurance. Multiple business owners have ruled out insurance solutions on their purchases even as insurance companies labour tirelessly to offer attractive insurance credit facilities to business owners.
The strategy used is to stagger the cost of insuring the businesses across a period to allow monthly installment payments. This enables peace of mind to the business owners as they get both insurance cover while also not incurring a lump sum payment from their business accounts altogether. This promotes business continuity.
Globally, insurance cover penetration rate stands at a mere 6%. Closer home in Africa, this rate further goes down to an average of about 3% as at 2018 according to Atlas Magazine, an insurance news organization with Kenya’s rate leading the pack within the East African region. The credit facilities expedition hasn’t been easy locally since the increase of interest rates.
Most financial institutions in Kenya have found it more risky to lend more funds to the locals who are business owners while opting for other promising lending with less risk, for example government bonds. Unexpected and unprecedented disasters are often cause of the fall of SMEs and their failure to recover. It is the sole business of insurance solutions to cover occurrences of these disasters as they help business owners to reclaim their businesses and to keep them moving in the event of unfortunate mishaps like fire, natural disasters and political violence. We urge SME owners to seek advice on matters that involve securing their businesses.