Political Violence in Kenya Affects Small Businesses and MFIs
Mbogo, S.

As the political violence in Kenya has persisted, interfering with the operations of the small businesses which account for much of recent bank lending, analysts warned that the risk of loan default looms large. The standoff has resulted in business closures and in turn affected cash flow in most businesses, eroding their ability to re-pay loans.

Other borrowers have been hit by double tragedy after their premises were broken into and looted or torched by rioters in the post-election fracas. Insurance companies in Kenya do not cover political risk, eliminating the possibility of businesses recovering the loss.

The raging violence has targeted small businesses in major towns, where most borrowers are more likely to set up businesses. “It is a matter of life and death for small businesses and they will need to work out a plan with their lenders in order to be able to service their loans,� said Ochieng Oloo, banking analyst and publisher of the Banking Survey.

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