World Bank provides 105mln USD loan to Kenyan bank to support SMEs

The World Bank's private lending arm on Monday extended a 105 million U.S. dollar to Co-operative Bank of Kenya to boost its lending small and medium businesses, women entrepreneurs and the housing sector.

International Finance Corporation (IFC) Director for East and Southern Africa Oumar Seydi said that small and medium enterprises (SMEs) make up more than 95 percent of all firms in Africa.

"However, they often face hurdles in accessing finance required to run and expand their operations," Seydi said in a statement issued in Nairobi.

The loan was mobilized in partnership with IFC's Managed Co-Lending Portfolio Program that enables investors to passively participate in IFC's future loan portfolio.

In 2012, IFC invested 60 million dollars to expand Co-op bank's SME portfolio and support the agribusiness sector that is major employer in the continent.

Seydi said that IFC works with banks and other local financial institutions to offer innovative and specialized services to businesses to help them expand and drive African economies.

So far, the World Bank's private lending arm has partnered with ten banks in Kenya to support entrepreneurs and small business growth.

Seydi noted that last year, IFC's collaboration with financial institutions helped provide loans to two million entrepreneurs in Africa.

According to IFC, approximately 40 percent of Kenya's SMEs are owned by women, who often face more barriers gaining access to finance than their male counterparts.

"IFC will therefore also advise Co-op Bank on how to tailor products to the needs of women entrepreneurs," he said.

The financial assistance will also help Coop Bank promote affordable housing in Kenya by expanding its mortgage lending and construction finance.

Seydi noted that rising urbanization rates has led to a housing shortage of two million units in Kenya, which will require private investment to build.

The East African nation currently has an underdeveloped mortgage market as there are only 25,000 loans outstanding in a country of more than 10 million households. IFC will work with Co-op Bank to streamline mortgage lending and support affordable housing projects.

Co-op Bank Chief Executive Officer Gideon Muriuki said that the IFC funding comes at a most appropriate time in view of the critical role SMEs play in supporting the growth in the economy.

"The long-term tenure of the facility will boosts Co-op Bank's ability to offer financing solutions that are better structured and priced to fulfill the long-term financing needs of customers," Muriuki said. Enditem