CBA eyes suppliers with new financing package

Regional lender Commercial Bank of Africa (CBA) has launched banking service aimed at speeding up supplier payments.

The move comes as an estimated Sh40 billion worth of goods remains unpaid for, that has seen suppliers suffer from serious financial challenges

CBA has teamed up with Kenyan based financial technology firm Ennovative Capital to offer supply chain financing where the bank will cover the retailers due and recoup the same once goods are sold.

CBA Managing Director Jeremy Ngunze said the service will be offered through an open platform, giving participating buyers and suppliers access to liquidity.

“This initiative is a really culmination of feedback from our customers in terms of helping them get better access to credit. We have been doing this but on a small scale. Today through the open platform we are able to provide access to SMEs who supply the corporate buyers,” Mr Ngunze said.

A survey carried out by the ministry of Trade and Industrialization in 2017 found that it takes up to seven months to pay suppliers, piling pressure on efficient cash flow.

The Central Bank of Kenya has also called out the national and county governments to speed up payments.

Through the online platform, CBA will enable companies contracting supplies to get access to cash equivalent to the orders, allowing them to pay their suppliers faster.

The buyers will approve and submit their supplier invoices to CBA through the Ennovative Capital platform and the bank in turn will facilitate immediate payments to suppliers with recourse to the buyer.

“The responsibility has now been extended to CBA, which will manage all the payments on behalf of the corporate institutions,” he said.

Ennovative Capital chief executive officer Kefa Nyakundi said the product is also applicable to overseas suppliers.

“Ennovative Capital is a platform that helps suppliers access funding for invoices they have supplied corporate buyers. They are able to get money earlier as opposed to borrowing from the banks. It also helps buyers manage costs instead of paying many suppliers they just pay the bank,” Mr Nyakundi said.

The facility is backed by African Guarantee Fund which is focused on spurring financing for small and medium enterprises in Africa.