Small and medium sized enterprises (SMEs) now have a chance to tap structured credit, track their expenses and settle cross-boarder deals quickly thanks to Absa Bank Kenya’s recently introduced business credit card. 

The innovative product, Absa Business Credit Card for SMEs, marks a shift in how small businesses access and manage financing in a market where few formal credit options are available to a sector that accounts for millions of jobs and powers more than 40 percent of the gross domestic product (GDP). 

Elizabeth Wasunna-Ochwa, director of business banking at Absa Kenya says the credit card for SMEs signifies the lender’s continued focus on supporting small businesses’ growth ambitions.

“If corporate businesses and personal banking customers have an opportunity to use credit cards, then surely SMEs must also have an opportunity. There is a place for them to use this card to drive their businesses to the next level,” said Ms Wasunna-Ochwa.

For SMEs juggling cash flow challenges and rising operational costs, the credit card presents more than just a payment tool. Ms Wasunna-Ochwa says the card is a tool for SMEs to operate “easier, faster and better” and reduce their financial friction.

The credit card will allow SMEs to purchase and pay for goods and services from any location across the world and be able to track their transactions to ensure they monitor and manage their operational costs more effectively.

Ms Wasunna-Ochwa said the card represents a tool for them to “follow their money” and avoid the pitfall of losing track of their transactions—something that has been standing in the way of sound financial management.

“One of the biggest pitfalls for SMEs is not that they do not have money; it is just that we can’t track it from a financial banking perspective. They receive money and make payments but can’t track it if it is not through a system. This card will allow them to track their money and become more efficient,” said Ms Wasunna-Ochwa.

Many Kenyan SMEs are involved in import and export business, meaning that they transact in multiple currencies such as the shilling, the dollar and the pound. Absa’s credit card therefore presents a chance for them to transact in any of the currencies without having to purchase those currencies.

For SMEs struggling with record-keeping, using the card to settle business transactions offers the added benefit of automatic digital records. This will simplify expense tracking and also helps manage risks like disputed or dishonored contracts by providing a clear, traceable payment trail.

“For many SMEs, the challenge is that money is used but they do not have a record of what the money was spent on. This makes it difficult to track costs and revenue. This tool will generate a statement that gives them visibility,” said Ms Wasunna-Ochwa.

In addition, by banks having visibility of their transactions, SMEs stand a chance to enhance their credit limits. Banks such as Absa will for instance require customers to provide statements of their transactions over a given period for the lender to determine credit limit. Therefore, such a record will be a key tool for generating digital records for seeking credit.

Despite the benefits that come with credit cards, concerns often linger about the risk of financial indiscipline, with individuals and businesses potentially spending beyond their means. Absa, however, assures that its SME credit card comes with responsible credit limits tailored to each customer’s financial capacity, promoting disciplined and sustainable business spending.

“We give customers limits that are within what they can manage. It allows them to operate within a margin they can manage. It gives them working capital, allowing them to utilise back and forth. We are very clear on the payment methods," said Ms Wasunna-Ochwa.

She explained that in order to ensure the credit cards are used wisely and for the right purpose, Absa offers teachings on how to use the card. The free lessons are offered through the Absa Business Clubs where SME customers learn from those who have used the cards wisely and avoid the mistakes of others.