Guaranty Trust Bank to get Sh1.6 billion IFC loan for SME lending

The International Finance Corporation is set to lend $15 million (Sh1.6 billion) to Guaranty Trust Bank Kenya for onward lending to small and medium sized firms (SMEs).

The loan is part of IFC’s funding of financial institutions in emerging markets under its Covid-19 crisis response programme.

The loans are designed to be disbursed to companies whose cash flows have been disrupted by the pandemic, helping to boost their working capital among other needs.

“The proposed loan of $15 million…is a one-year loan, with the option to be rolled over for an additional year at IFC’s discretion. The loan will provide GTBK additional liquidity support for its operations amidst prevailing economic challenges,” IFC said in its investment disclosures.

“This project will avail working capital and trade-related loans to borrowers, predominantly SMEs, stabilising supply chains and re-enforcing resilience in critical sectors such as trade, fast moving consumer goods, pharmaceuticals and manufacturing, that have been impacted by the pandemic.”

The bank is a subsidiary of Lagos-based Guaranty Trust Holding Company Plc.

The Nigerian multinational acquired the Kenyan bank, previously trading as Fina Bank, in December 2013.

Guaranty Trust Bank Kenya now has nine branches with a focus on corporate, SME and personal banking. The bank will provide loans to clients fitting the criteria established by IFC.

The global financier defines SMEs using various measures including firms having between 10 and 300 employees or annual sales of $100,000 (Sh11 million) to $15 million (Sh1.6 billion).

The loan size per borrower usually ranges from $10,000 (Sh1.1 million) to $2 million (Sh221 million).

IFC also encourages the banks it funds to lend to women-owned enterprises and climate-related ventures such as renewable energy projects.

The proposed loan to the lender is the latest for the IFC, which has been funding scores of Kenyan banks including KCB and Co-op Bank.