Diamond Trust Bank Kenya Limited (DTB) is set to take a $100 million (Sh12.2 billion) short-term loan from the International Finance Corporation (IFC) for onward lending to small and medium-sized enterprises.
The IFC said the loan is part of its financing of banks to support their customers’ working capital and trade-related needs as the global economy recovers from the impact of the Covid-19 pandemic.
“IFC will invest up to $100 million (Sh12.2 billion) in DTB, in the form of senior debt investment,” the global financier said in its investment disclosures.
The loan will mature in 24 months but there is an option to renew it once for a total of 36 months.
Small and medium enterprises (SMEs) are a major clientele group for DTB, which serves 317,000 customers in Kenya and more than 626,000 in East Africa, according to the IFC.
Firms that are expected to benefit from DTB’s onward lending are those fitting the criteria set by IFC such as having between 10 and 300 employees or annual sales of $100,000 (Sh12.2 million) to $15 million (Sh1.8 billion).
The loan size per borrower will range from $10,000 (Sh1.2 million) to $2 million (Sh243 million). IFC also seeks to boost lending to women-owned businesses.
Local banks are increasingly taking substantial loans from global funds such as the IFC, European Investment Bank and Agence Française de Développement, attracted by relatively more favourable terms of the debt including lower interest rates and longer maturity.