KCB Bank has received Sh16.3 billion ($150 million) funding for the International Finance Corporation to finance small scale traders as well as climate change projects.
The Bank’s CEO Joshua Oigara said the credit line would enable the lender to increase its financing to SMEs and market segments including women and youth-owned businesses.
“We are happy to partner with IFC in this innovative financial instrument, which will enable us to support the economy as the country begins recovery from the impact of Covid-19. It will enable us to open a path for more credit to SME entrepreneurs,” he said.
“The financing is in line with our sustainability agenda to support a climate-resilient economy and reinforces the bank’s commitment to the Principles of Responsible Banking.”
Under the loan agreement, KCB will be required to borrow the money to the SME and climate finance sectors in the country while the IFC will provide training in the areas of green finance.
In 2015, KCB included a social and environmental agreement system within its lending process to promote the sustainability agenda.
The bank’s CEO said the latest credit line would complement the recently launched micro, small, and medium enterprises (MSMEs) guarantee scheme that aims to de-risk small firms and enhance credit accessibility.
Women, SMEs, and the youth normally face acute financing gaps, with many banks viewing them as high-risk borrowers.
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SMEs and micro-enterprises registered a non-performing loan ratio of 14.9 percent, the highest among KCB portfolios – at the end of June.
The IFC’s credit line to KCB comes after an Sh5.43 billion ($50 million) loan to Equity Group as part of its global $8 billion Covid-19 facilities that it launched in March.
The loan cement the IFC’s position as the largest financier of local banks.
International financiers in KCB Group books include the African Development Bank and the European Investment Bank.