FINA Bank in partenership with the Center for International Development (CID) of Harvard University has launched a project to test new technologies that evaluate potential entrepreneurs for small businesses in East Africa.

The pilot project will work through the Center’s Entrepreneurial Financial Labs (EFL) in Kenya, Rwanda, and Uganda.

The project’s new evaluation technology screens borrowers of money basing on future earnings using psychometrics rather than that based on their current wealth (collateral-based lending) or social reputation (micro-credit.)

According to Robert Warlow, Group CEO, Fina Bank, the concept of looking at the psychometric aspects of a small business owner, as against the more traditional lending appraisal tools, is a potential leap forward which should benefit SMEs in the future when it comes to borrowing money.

"We are delighted to have partnered with Harvard University on this interesting project,” he affirmed.

This psychometric technology has been developed in partnership with psychologists and testing agencies worldwide, and piloted with financial organizations in South Africa.

The goal of this initiative is to unlock dormant capital in East Africa and bring small and medium enterprises (SMEs) of the ‘missing middle’ into the formal financial system SMEs who would otherwise not have access to capital.

This project will test the EFL technology on a sample of new and existing Fina bank clients in order to study its feasibility as a screening tool. It is also expected to highlight East African entrepreneurs as well as finding ways through which financial institutions can identify them.

According to Bailey Klinger, Director of EFL, the evidence shows that access to finance is the key barrier to SME growth.

"Improving access to finance by making it easier for banks to identify high-potential entrepreneurs in an accurate and inexpensive way would help unlock the entrepreneurial potential of East Africa’s SMEs, with a significant impact on poverty reduction and economic growth,” He add.

Fina bank is the Leading Regional SME bank based in Kenya, Rwanda and Uganda.

The SME focused bank has a developmental emphasis especially in the rural areas and aims to serve the entire SME sector of Kenya and the East African region.

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