Markets & Finance

World Bank private arm offers Sh8.3bn loans to SMEs

money

International Finance Corporation (IFC) is likely to lend more than Sh8.3 billion to Kenyan businesses this year. Photo/File

The World Bank’s private lending arm is likely to lend more than Sh8.3 billion to Kenyan businesses this year.

The amount is more than half of a Sh16.6 billion ($200 million) planned investment in East Africa by the International Finance Corporation (IFC).

Kenya has already taken half the amount with the recent signing of the Sh8.3 billion ($100 million) forex loan to Equity Bank and could take more before December.

“How much will go to any particular country in the region is a matter of demand and supply. We could lend more to Kenya as long as the borrowers are able to justify the loans,” said Manuel Moses, the Nairobi-based IFC investment officer for sub-Saharan Africa.

The company will make the investments through lending to small and medium enterprises as well as other businesses through both local and foreign currency lending.

Mr Moses was speaking on Monday shortly after a video conference in which IFC and MasterCard Foundation were revealing a partnership for Sh3 billion ($37.4 million) as cash to be lent to small businesses and individuals through microfinance institutions in Africa.

He said that IFC was aware of forex risks and cushioned SMEs by guaranteeing them when they took forex loans.

He pointed to the case where IFC lent forex to Faulu Kenya – for onward lending to its clients – where StanChart would give the SMEs local currency but the forex repayments were guaranteed by IFC.

“Disadvantaged people derive real benefits from having more control over their finances and our partnership with IFC will help bring responsible financial services to a significant number of people in sub-Saharan Africa,” said president and CEO of the MasterCard Found Reeta Roy, speaking from Johannesburg during the video conference monitored in Nairobi.