The International Finance Corporation (IFC) invested an additional $400.56 million (Sh51.76 billion) in Kenyan companies in the form of loans, guarantees and equity stakes in the year ended June 2024, entrenching the institution’s portfolio in the local market.
Disclosures for the financial year to June 2024 shows that IFC’s investments to the local private sector rose to $5.4 billion (Sh697.82 billion at current exchange rates) in the review period compared to the previous year’s $4.99 billion (Sh633.4 billion at prevailing exchange rates).
Loans to Kenyan firms rose to $5.12 billion (Sh661.78 billion at current exchange rates) from $4.72 billion (Sh610.67 billion) a year earlier while guarantees and stakes bought in the Kenyan private sector rose to $278.93 million (Sh36.04 billion) from $273.93 million (Sh35.39 billion).
The number of Kenyan firms that benefited from IFC’s investments rose to 151 from 146.
IFC —the arm of the World Bank tasked which lends to the private sector in developing economies— is increasingly becoming a major source of long- term funding to Kenyan firms.
This has been more pronounced at a time the sector struggled to get credit from commercial banks due to high interest rates.
Loans from IFC are mostly concessional offering a major reprieve to business that might have struggled in an environment where banks tightened lending with official data showing that lending by commercial banks to the private sector in Kenya contracted 1.1 percent in the year to November 2024 on high borrowing costs.
The slowdown in lending by local banks hurt the economic prospects of the country given that most of the investments are financed by bank loans.
Banks kept interest rates high for the past two years despite the reduction of the benchmark lending rate by the Central Bank of Kenya (CBK). The move by the regulator was expected to lead to cheaper credit from banks.
Notable beneficiaries in Kenya from IFC are banks that receive millions of dollars for onward lending to Small and Medium Enterprises (SMEs).
