International Trade Finance Products Provided by Kenya Commercial Bank Limited to Small and Medium Sized Enterprises

Abstract

SMEs would rather deal with the dreaded unscrupulous middlemen than venture into the murky and deep waters of international trade. None of the studies done has sought to address the problem of inadequate take up of the international Trade finance products by SMEs with specific reference to KCB SMEs. This study therefore sought to answer the question as to why SMEs in KCB are not quickly taking up the International Trade finance products offered to them by the bank. The study used case study research design. The data was collected among interviewees were ten KCB SME customers and five KCB staff members. Data was collected using both primary and secondary data. The primary data was collected using interview schedules data was analyzed using content analysis. From the study findings, the study concluded that their various international trade finance transactions at Kenya Commercial Bank limited. This transactions included issuance of letters of credit, bank guarantees and discounting of invoices among other products. The study concluded that the considerations that KCB gives while dealing with international trade finance products provided to small and medium sized enterprises were collateral requirement, nature of business, number of years that the SME had been a customer at KCB, customers experience in the area of specialization, whether the customer was doing business with a sanctioned country. The challenges facing KCB while issuing international trade finance products to SMEs included knowledge gap, the collateral requirement, the middlemen, impatience among some SMEs and the sanctions. On ways to curb challenges faced by KCB were through conducting awareness campaigns to sensitize SMEs customers about the various international finance products, through implement fully the tiered collateral requirements, and through structuring transactions depending on clients’ needs and ability to pay. The study recommends that bank management should review the policies guiding the provision of international trade finance products to the SMEs. The study also recommends that the management should conduct regular awareness campaigns to sensitize SMEs customers on various international finance products. The study also recommends that the management should review the collateral requirement by the SMEs