ICT centres’ lobby asks for review of loan terms
Posted Sunday, July 29 2012 at 20:03
A lobby of the beneficiaries of a revolving fund aimed at accelerating the spread of ICT services is pushing for a review of the loan terms advanced to members.
Through the Pasha Association of Kenya, they demand a longer repayment period, citing low business volumes and escalating cost of doing business.
They claim the two challenges have made it hard for them to honour their repayments and now fear defaults.
“The main problem facing most entrepreneurs running the government-supported pasha project is loan servicing since the duration is short,” said the association’s chair Geofrey Gitau during a graduation ceremony at the Kitengela Pasha centre.
Pasha is a Sh320-million project funded by the World Bank and run by the Kenya ICT board to ensure access, connectivity and increase computer literacy in rural Kenya.
In its first phase, April 2011, about Sh48 million was awarded to 37 investors. As at June, Sh34 million had been disbursed by Family Bank which is the administering financier.
Last month, the bank released additional Sh28 million to 26 entrepreneurs to develop new ICT centres in the counties in the second phase of the project.
About 63 Pasha centres have been approved to date accounting for 30 per cent ICT coverage in the country.
Board. Kitengela Pasha Centre manager Josky Mwathe requested the government to allow entrepreneurs a more reasonable repayment period to allow them to enjoy profit from the ventures.
“We are doing the programme on behalf of the government and we need enough grace period to ensure the business sustainability, “said Mr Mwathe.
The entrepreneurs are hoping to have that the current grace period changed to more than the current three months to allow the businesses to mature.
They also want the repayment period stretched. Currently, the loan is given to entrepreneurs who qualify the ICT Board training without collateral and is repayable within three years at an interest rate of 10.5 per cent per annum.
Speaking to Nation Information and Communications permanent secretary Bitange Ndemo confirmed that some managers have defaulted the loans they received from the government.
Dr Ndemo said that the project has also encountered challenges arising from poor training and lack of technical knowledge on how to run a business by the managers.
“The project is not going the way we expected and we might need to do some additional training on the entrepreneurs,” he said.
He challenged the new entrepreneurs to be more innovative at the services they will be offering at their constituencies in order to be able to create sustainable businesses.
The centres have also found it hard to offer affordable services because the government has lacks a legally binding contract with internet service providers and mobile operator to avail subsidised services to them.