Diversion of cash for personal use linked to non-performing SME
An ambitious plan by four Italian tycoons to set up a Sh71 billion city in Malindi town, Kilifi County, has run into headwinds following claims of fraud by Kenyan partners.
Diversion of cash for personal use is the biggest contributor to non-performing loans among small and medium enterprises (SMEs), analysts say.
According to Susan Situma, the Head of SME Banking at Absa Bank Kenya, many small business owners often fail to separate personal finances from business finances. By using money meant for the business to meet family needs, they end up struggling to pay suppliers, staff, and by extension the bank, when the loan repayment is due.
